The impact of rising interest rates on the Greater Jakarta landed housing market
We are still cautiously optimistic about Indonesia’s landed housing market in 2023.
Landed housing is one of the most resilient sectors during the pandemic, as can be seen from the buyers’ positive responses to the launch of new products of various types in the Greater Jakarta area. We have seen a record year for demand during the period, supported by government tax incentives, such as VAT waiver and LTV relaxations.
Hence, developers were able to sell off their existing inventory due to the healthy demand and create opportunities to take advantage to launch new products.
The government has increased the benchmark interest rate by 175 basis points over the past four months to curb inflation. Yet, developers continue to launch their new products actively and, to some extent, still receive healthy demand.
The increase could affect the middle-low segment, which relies heavily on a mortgage payment scheme. So, these buyers could take a longer time to decide, postpone their purchase, or shift to a more affordable unit meanwhile developers will take an effort by giving flexible and attractive terms of payment.
Going forward, we are still cautiously optimistic about Indonesia’s landed housing market in 2023.