Indonesian president Joko Widodo and Public Works and Housing Ministry housing provision director general Khalawi Abdul Hamid inspect houses which the government intends to subsidise for millenials. THE JAKARTA POST
Indonesia's Public Works and Housing Ministry is campaigning for the sale of houses to millennials with government subsidies amid soaring house prices this year.
“We are currently working on the one million houses programme [Program Satu Juta Rumah, PSR] for the supply of houses for all layers of society, including millennials,” the ministry’s housing provision director general, Khalawi Abdul Hamid, said last week.
President Joko “Jokowi” Widodo initiated the PSR in April 2015 as one of his national strategic projects, for the construction of one million houses per year for community members, based on Presidential Regulation No 3/2016 on the acceleration of the implementation of national strategic projects.
In implementing the PSR, the government has cooperated with a number of stakeholders, including banks, developers and private companies.
As of last year, 3,542,318 houses had been built under the PSR project. The year 2018 alone saw the construction of 1,132,621 houses, 13 per cent higher than the annual target.
He said that this year, the government was expecting the construction of 1,250,000 houses, with millennials as the largest potential buyers.
The number of millennials, he said, was now estimated at 81 million, or approximately 30 per cent of the total population in the country.
‘New mortgage products’
State lender Bank Tabungan Negara (BTN) has recorded that six per cent of millennials earned an average income of 12 million rupiah ($847) per month, 14 per cent earned seven to 12 million rupiah, 34 per cent earned four to seven million rupiah and 46 per cent earned less than four million rupiah.
Khalawi acknowledged that the ministry had made efforts, including cooperation with BTN, which provides housing mortgages, to maximise the development of houses for millennials.
“To help millennials to buy houses amid price rises, BTN has provided new KPR mortgage products, including KPR Gaesss, with simple requirements,” said BTN president director Maryono, referring to housing loans (Kredit Pemilikan Rumah, KPR).
Maryono said with KPR Gaesss, millennials could purchase houses using a housing loan with an interest rate of 8.25 per cent per year and a down payment of only one per cent.
“Millennials aged between 21 and 30 who have had a permanent job for at least one year can buy a house with the KPR Gaesss scheme,” he said.
Since October last year, loans channelled through KPR Gaesss had reached 6.9 trillion rupiah. BTN is targeting the loans to increase by 3.17 trillion rupiah by the end of this year.
In addition to KPR Gaesss, the government has provided subsidised houses for low-income communities, including a large number of millennials.
This subsidised houses come under various programmes including House Financing Liquidity Facility (Fasilitas Likuiditas Pembiayaan Perumahan, FLPP) and Interest Difference Subsidy (Subsidi Selisih Bunga, SSB).
This year, the number of houses built under the FLPP programme is expected to reach 68,858 and those under the SSB programme 100,000. The average price of subsidised houses will be raised from 140 to 153 million rupiah each.
Khalawi said BTN was committed to helping finance the purchase of 127,104 subsidised houses, consisting of 28,744 under the FLPP programme and 98,360 under the SSB programme. So far, the number of subsidised houses sold via BTN has reached 75 per cent of the total.
Research by the Housing Finance Center (HFC) has found that the national House Price Index (HPI) was 163.9 in the first quarter of this year, an increase of 7.34 per cent from the rate in the same period last year.
HFC was established by BTN with the aim of organising educational events, research and consultancy related to the property sector.
According to the research, Batang regency in Central Java had the highest HPI rate of 253.29 in the first quarter, reflecting a year-on-year increase of 20.44 per cent after the opening of the Pemalang-Batang toll road last year.
Jember in East Java ranked second with an HPI rate of 252.20, followed by Batam in Riau Islands with 232.28, Bantul in Yogyakarta with 221.62, Banyumas in Central Java with 219.19 and East Jakarta with 215.50.
In addition, based on data from research conducted by Trisakti University, the country’s residential property prices have increased by 17 per cent per annum.
The increase of property prices is at odds with the increase of consumers’ incomes, which rise by approximately 10 per cent every year. THE JAKARTA POST
