Coping with High House Prices

KOMPAS/PRIYOMBODO

Workers build houses in the area of Mount Sindur in Bogor, West Java, on Aug. 20 (20/8/2019). Housing construction is growing in the suburbs of Jakarta, where land is still available at affordable prices.

JAKARTA, KOMPAS — People who make a monthly income of about Rp 7 million (US$500) are finding it difficult to buy a house. People that fall into this income bracket are no longer permitted to buy subsidized houses, even though they face difficulties in applying for housing loans (KPR) and in making the required down payment for non-subsidized houses.

Affordable homes are only available outside city limits and mean high transportation costs, while houses located within city limits are expensive and unaffordable for many. Some local administrations provide public housing through rusunami (low-cost apartments) and rusunawa (low-cost rental apartments). However, purchasing subsidized housing and renting low-cost apartments are both regulated strictly.

The government offers a subsidized housing scheme for people with monthly incomes of a maximum Rp 4 million, which thus excludes people in the maximum Rp 7 million monthly income bracket.

According to Bank Indonesia data, as reported in this daily on Wednesday, the price of houses increased an average 1.47 percent year-on-year in 18 cities in the second quarter. The price of small houses saw the largest increase of 2.18 percent. The price of medium-sized houses rose 1.32 percent and the price of large houses rose 0.92 percent.

To cope with the current situation, many workers and young families rent houses or apartments while they save towards their down payment so they can apply for a housing loan.

KOMPAS/HENDRA A SETYAWAN

A subsidized housing complex is being built in the area of Kampung Kandang in Bogor, West Java, on Aug. 8 (20/8/2019). According to data from the Public Works and Public Housing Ministry, an estimated 800,000 new housing units are needed every year. A shortage of 11.4 million units has been estimated.

Atika Permatasari, 27, a private employee, decided to rent a house near her office. She and her husband plan to buy a house in Cinere, South Jakarta, but they do not have enough savings. "We aim to have our own house in the next three years," she said.

Soleh, 29, another private employee, lives with his wife and child in a rental house in West Jakarta, because he cannot afford buy a house in the capital city. "I want to apply for the KPR, but I do not meet the criteria," he said. While he lives in a reantal home, Soleh is saving his money so he can one day buy a house with cash.

Meanwhile, Idris, 29, an unmarried private employee, lives in a rental apartment in Central Jakarta. But Idris has purchased a house for retiring to his hometown of Banyuwangi, East Java.

"Landed houses are affordable only in Jonggol or Cullinan of Bogor regency,” he said, adding that he would have to spend a lot of time commuting to his office if he lived in those areas.

Kompas ran a simple survey on its Instagram account (@hariankompas) by posting the question: "If you had a monthly salary of about Rp 7 million, what is your strategy for buying a house?" Some responded that they would buy a house in Jakarta’s suburbs, while others said they would save towards their own business, and then buy a house with cash from the profits they made through their business. Others say they would save money towards building their own house.

KOMPAS/P RADITYA MAHENDRA YASA

Some subsidized houses in Kalongan in North Ungaran district, Semarang regency, Central Java, on Thursday (22/8/2019). Subsidized houses provide an alternative for low-income people through various kinds of assistance.

Long term

PT Ciputra Development director Harun Hajadi said that Ciputra had eased its mortgage requirements so customers could buy 3- to 5-year-old houses.

Still, the eased requirements do not benefit people on the border of the income bracket – that is, their monthly income exceeds the maximum limit for subsidized houses, but is still too small to buy non-subsidized houses. In the end, the loan facility primarily targets customers of the upper-middle income group.

Harun said that offering a longer maturity period would help people who fell within this borderline income group.

The latest Bank Indonesia survey on the price of residential property shows that 74.32 percent of home buyers took out mortgages, 6.64 percent purchased their homes with cash, and 19.05 percent were purhcasing their houses through cash installments.

The BI data also showed that banks disbursed Rp 489.2 trillion in housing loans in June.

KOMPAS/FERGANATA INDRA RIATMOKO

Workers build a subsidized house in Mojosongo village, Mojosongo district, Boyolali, Central Java, on Saturday (24/8/2019). This “type 30” house is marketed at Rp 140 million. People allowed to buy subsidized housing are those whose basic salaries are less than Rp 4 million per month. The subsidized housing program is aimed at, among other things, helping low-income people have decent housing.

Housing provision director general Khalawi Abdul Hamid of the Public Works and Housing Ministry said that people within the Rp 7 million income bracket could purchase many low-cost apartments located in downtown Jakarta. (LKT/MED/NAD)