As of June 2024, the average land price in the Greater Jakarta area stood at approximately Rp 12,540,852 per sqm, showing a year-on-year increase of 0.9%. Notably, advancements in various transportation infrastructure have contributed to the rising land prices along the surrounding corridors.
The end of the government’s full VAT exemption incentives for the purchase of new homes under IDR 5 billion in June 2024, was also observed as the other contributor to the lower new supply during the review semester. From July to December 2024, the incentive will be reduced to 50% VAT discount. To be qualified for this tax incentive program, developers are focusing on selling their ready-stock units or launching units that can be handed over before June 2024.
In April 2024, Bank of Indonesia raised its benchmark interest rate to 6.25% which is expected to affect and lead to the increase of the average prime mortgage lending rates provided by banks. To address this, banks and developers may introduce more competitive payment options, such as down payment installment programs or express mortgages.
Up until the first half of 2024, mortgages remained as the most preferred payment method, accounting for 74% of transactions, followed by cash installments at 17% and hard cash payments at 9%.
DEMAND: STEADILY IMPROVED
Throughout the first half of 2024, market demand rate for landed residential properties steadily improved with the middle segment led the demand, representing about 29.5% of the total demand, followed closely by the upper segment and the upper middle segment which accounted for 25.8% and 25.5% of the total units sold, respectively.
Notably, a significant portion of this demand (79% of buyers) came from end-users, comprising a mix of first-time homeowners and established families looking for larger houses to meet their growing needs.
The average monthly absorption rate per estate was 13.6 units, representing a year-on-year decline of 30.5%, with average absorption value per estate standing at Rp 33.3 billion per month. The decline, however, does not necessarily indicate a decline of the market purchasing power as less supply than in the last year was offered during the review semester and some estates have
observed to launch new large clusters in the upcoming semesters. The average transaction value per unit rose to around Rp 2.45 billion, an 18.4% increase compared to the first half of 2023, signifying a growing demand for higher segment products. Tangerang led with the highest average absorption rate per estate, averaging at 15 units per month, followed by Bekasi of 14 units per month.
OUTLOOK
Digital technology is on the rise, with virtual immersive experiences becoming a new marketing feature that allows consumers to explore the units they are interested in from their own monitors. Several developers who have adopted this feature reported positive outcomes, noting an increase in sales driven by higher conversion rates.
Additionally, e-certificates for houses are reportedly in progress and the local government starts to educate developers about this new initiative.
