Indonesia Property Outlook – What’s the Market Trend for 2022?
2022 presents a brighter start for the national property industry players, let’s figure out how.
Tracing back 2020 and 2021 – Government Stepped in and Upped the Industry Game during the Pandemic
There was a tiny gap in property demand during the pandemic. The massive social restriction back in 2020 and 2021, especially, had successfully held down people’s desire to purchase units. People were unable to comfortably travel and reluctant to invest in one, resulting in a decrease in property search trends and property price index in the midst of Q4 2020 and Q1 2021.
However, as Indonesia is striving to recover its economic state, optimism was what remains and we began seeing price indexes bounce back starting from Q2 2021 and higher in Q3 2021. We have provided a diagram to describe the situation for the property price indexes from 2020 to 2021 below.
Data source: rumah.com
The figure of property price index in Q3 2021 was proven higher than that of Q3 2020, showing there is a percentage increase of 3.24% ((year-on-year/YoY).
The government established several attempts that allow a breather for the industry players and the sector smoothly running. The impact was quite significant even when another social restriction was a sudden move that should be executed by the government in the early Q3 2021.
100% to 50% of VAT (Value-Added Tax) was borne by the government and the Land and Building Rights Acquisition Tax was also lessened. Bank Indonesia eased the down payment by 0% and relaxed the Loan to Value/Financing to Value (LTV/FTV) ratio of loans for all types of property. According to Perry Warjiyo, BI Governor, BI’s policy will continue until December 31, 2022.
What We Can Conclude from 2021
The provision of incentives from the government kept the optimism of the market alive until the end of the year 2021. This promotes confidence to the developers to push constructions during Indonesia’s economic recovery period as we can tackle down the reduction of property prices.
Trends that Will Play a Major Role in 2022
We have noted down several vital points that will affect the growth of the property sector in 2022 as published by Rumah.com, those include:
#1 Property Sector Still Relies on The Government’s Provision of Stimuli to Attract the Market
The government’s merits to help the property sector in 2021 had proven effective to increase sales. People also were appreciative of the incentives given. Demands were coming from people with low, moderate, and high incomes because the policies opened up broader chances for them to find a property that suited their liking.
#2 Infrastructure Development Boosts the Buyers’ Desire in Selecting a Unit
Infrastructure projects by the government to improve transportation lanes like new outer ring toll roads elevate the property price quite significantly. Developers and buyers gain benefits from the areas with such projects.
#3 People Are Hoping for Lower Mortgage Interest Rates
Interest rates influence the amount of installment people have to pay. High-interest rate discourages property buyers who are planning to use credits. Therefore, the trend in 2022 for the property sector in a time of economic improvement will also depend on how much the government is willing to help lower the housing loan interest rates.
#4 Mid-Range Property Search Increase
Based on an analysis performed by Rumah.com, from January to October 2021, there was an increasing enthusiasm from the property leads on their site about 52% to search for mid-range properties above IDR1 billion. Most of them were tending to properties in the city center.
#5 Vaccination Encourages Buyers to Perform Surveys
As the pandemic waves are soothing and people also have done their full vaccination, they feel more secure to go out and to be in direct contact with others. This condition gives them relief when they are surveying the targeted location. On the other hand, being isolated at home during the social restriction gave them a second thought about renovating their home and starting to invest in property.
#6 Sustainable Home Features Should be Taken into Consideration
People are aware of the importance of sustainable home features especially those that allow them less cost on electrical bills and transportation. In a nutshell, the market puts more demands on a property model that is not only modern in design but applies cross-ventilation with large windows. They would also love a property that provides easy access to public transportation. These, overall, save them much more energy.
IT NEVER CHANGES! THE RIGHT TIME TO BUY PROPERTY IS ALWAYS NOW
What we learned from 2021, especially between Q4 2020 and Q1 2021 was yes, there was a price drop. It was apparent, yet it was nothing compared to the next quarters. The figures built up at a very jaw-dropping surge from 110.3 to 114.8 in Q3 2021. All in all, whenever you have the chance and as long as your finance can sustain you to invest, properties are always an asset that you should not overlook. It all leads to one big question mark, “are you invested to own one?”.
