Indonesia's Residential Property Market Analysis 2025

Indonesia’s residential property prices have remained relatively stable, supported by a modest uptick in sales transactions that signals improving demand in the market.

This extended overview from Global Property Guide covers key aspects of Indonesia's housing market and takes a closer look at its most recent developments and long-term trends.

Table of Contents

Housing Market Snapshot


In the first quarter of 2025, the composite-16 property price index rose by only 1.1% from a year earlier, following y-o-y growth of 1.4% in Q4 2024, 1.1% in Q3, 1.8% in Q2, and 1.9% in Q1, according to the country's central bank, Bank Indonesia. When adjusted for inflation, property prices were up by a minimal 0.5% y-o-y in Q1 2025 - the first increase since Q2 2021.

Quarter-on-quarter, residential property prices rose by a meager 0.3% (0.4% inflation-adjusted) in Q1 2025.

"The latest Residential Property Price Survey conducted by Bank Indonesia in the first quarter of 2025 indicates limited gains in terms of residential property prices in the primary market, as reflected by 1.07% (yoy) growth in the Residential Property Price Index (RPPI), moderating from 1.39% (yoy) in the fourth quarter of 2024," said the Bank Indonesia's report.

Looking at the longer term, the property market has hardly moved, with prices up by just 17.4% from 2016 to 2024. In real terms, prices fell by a cumulative 6% over the same period.

Indonesia's house price annual change:

Data Source: Bank Indonesia.

When inflation is considered, fifteen of the eighteen major Indonesian cities recorded minimal house price increases in Q1 2025 as compared to the same period in the prior year.

RESIDENTIAL PROPERTY PRICES IN INDONESIA'S MAJOR CITIES, Q1 2025
Major Cities Y-O-Y Change (%) Q-O-Q Change (%)
Nominal Real Nominal Real
Bandung 1.02 0.46 0.15 0.29
Bandar Lampung 0.28 -0.28 0.01 0.15
Banjarmasin 2.18 1.61 1.15 1.28
Denpasar 0.90 0.34 0.20 0.34
Palembang 1.43 0.86 0.22 0.36
Semarang 0.85 0.29 0.44 0.57
Yogyakarta 0.84 0.28 0.76 0.90
Padang 0.84 0.28 -0.05 0.09
Medan 1.30 0.73 0.18 0.32
Makassar 0.66 0.10 -0.02 0.11
Manado 0.25 -0.31 0.18 0.32
Surabaya 1.05 0.49 0.14 0.28
Pontianak 2.64 2.07 1.24 1.38
Batam 1.84 1.27 0.18 0.32
Balikpapan 1.25 0.68 0.09 0.22
Jabodebek-Banten 1.06 0.50 0.52 0.66
Pekanbaru 2.69 2.12 -0.26 -0.12
Samarinda 0.18 -0.38 -0.75 -0.62
Composite in 18 Cities 1.07 0.51 0.30 0.44
Sources: Bank Indonesia, Global Property Guide

Demand is noticeably improving. In Q1 2025, residential property sales increased slightly by 0.73% from a year earlier, in stark contrast to the y-o-y decline of 15.09% in the previous quarter, based on figures from Bank Indonesia. Quarter-on-quarter, sales experienced a strong growth of 33.92% in Q1 2025, after falling by 6.62% in the prior quarter.

In Q1 2025, two strata-title apartment projects were completed in Jakarta, adding a combined total of 708 units. This brought the capital city's overall apartment supply to 230,755 units, marking a modest increase of 0.3% quarter-on-quarter and 1.7% year-on-year, according to Colliers International.

The wider economy remains resilient, despite global headwinds. During 2024, Indonesia posted an economic expansion of 5%, following annual growth of 5% in 2023, 5.3% in 2022, 3.7% in 2021, and a pandemic-induced contraction of 2.1% in 2020.

Then in Q1 2025, the country registered a real GDP growth rate of 4.87% from a year earlier, slightly down from y-o-y expansions of 5.02% in Q4 2024, 4.95% in Q3, 5.05% in Q2, and 5.11% in Q1, based on figures released by Statistics Indonesia.

Despite this, the government has retained its GDP growth target at 5.2% in 2025. However, Indonesia's Finance Minister recently warned that new U.S. tariffs could lower the domestic economy's growth by 0.3 to 0.5 percentage points. Recently, both the International Monetary Fund (IMF) and the World Bank have downgraded their economic growth forecasts for Indonesia. Citing slowing global growth driven largely by geopolitical tensions, trade disputes, and evolving monetary policies in advanced economies, institutions now project Indonesia's GDP to grow by 4.7% in 2025.

Historic Perspective:


Jakarta's apartment prices remain more or less steady

In Jakarta, prices of apartments rose by a minuscule 0.3% y-o-y to IDR35.77 million (US$2,209) per sqm in Q1 2025, according to Colliers International. Quarter-on-quarter, apartment prices were up slightly by 0.1%.

AVERAGE APARTMENT PRICES IN JAKARTA, Q1 2025
Area Average price (IDR/sqm) Average price (USD/sqm) y-o-y change q-o-q change
CBD 52,917,121 3,268 0.14% 0.05%
South Jakarta 40,649,440 2,510 0.62% 0.19%
Non-prime areas 27,213,403 1,681 0.33% 0.08%
Average 35,770,000 2,209 0.30% 0.10%
Sources: Colliers International, Global Property Guide

Over the same period:

  • In Jakarta CBD, the average price of strata title apartments rose slightly by 0.14% y-o-y to IDR52.92 million (US$3,268) per sqm in Q1 2025. Quarterly, apartment prices were almost unchanged.
  • In South Jakarta, the average price of strata title apartments rose by a meager 0.62% y-o-y to IDR40.65 million (US$2,510) per sqm in Q1 2025. Quarter-on-quarter, prices were up slightly by 0.19%.
  • In the capital's non-prime areas, the average price of strata title apartments was up by 0.33% y-o-y to IDR27.21 million (US$1,681) per sqm over the same period. Quarterly, prices were up by a miniscule 0.1%.

Indonesia House Price Indices graph

Demand Highlights:


Demand improving again

Demand is showing some improvements. In Q1 2025, residential property sales increased slightly by 0.73% from a year earlier, in stark contrast to the y-o-y decline of 15.09% in the previous quarter, based on figures from Bank Indonesia. Quarter-on-quarter, sales experienced a strong growth of 33.92% in Q1 2025, after falling by 6.62% in the prior quarter.

Though there are wide variations in terms of property size:

  • Small residential properties: sales were up strongly by 21.75% in Q1 2025 from a year ago, in sharp contrast to a y-o-y contraction of 23.7% in the previous quarter. Quarterly, sales for small houses skyrocketed by 83.97% in Q1 2025, following an 11.94% decline in Q4 2024.
  • Medium houses: sales plunged by 35.76% y-o-y in Q1 2025, worse than the 16.61% decline in the prior quarter. Quarter-on-quarter, sales dropped 13.57% in Q1 2025, after falling by 9.13% in the previous quarter.
  • Large houses: sales were down by 11.69% y-o-y in Q1 2025, after increasing by 20.44% in Q4 2024. Quarterly, sales dropped by 22.91%, following a q-o-q growth of 14.12% in the prior quarter.

"Property price developments were influenced by an increase in residential property sales in the primary market in the first quarter of 2025, mainly driven by sales of small residential properties, in contrast to declining sales of medium and large houses. Overall, residential property sales recorded 0.73% (yoy) growth in the reporting period, following a 15.09% (yoy) contraction in the fourth quarter of 2024," said Bank Indonesia.

Accordingly, the key challenges in the residential property market included rising building material costs, licensing issues, high down payment requirements for housing loans, and high taxes.

Previously, demand was buoyed by several market stimulus measures introduced by the government. In 2023, the Ministry of Finance issued regulation PMK 120/2023, extending the value-added tax (VAT) incentive program. The VAT subsidy, which applies to all residential properties priced up to IDR 5 billion (US$308,790), amounts to 11% until June 2024 and 5.5% from June to December 2024. Currently, there are 10,581 units eligible for the incentive.

In addition, the extension of the loan-to-value (LTV) ratio relaxation policy, which expired last year, also encouraged increased activity in the housing market.

Moreover, the Omnibus Law introduced two initiatives to attract foreign investors, including the simplification of qualification for property purchases and the upgrade of the type of titles that foreigners can hold, from the previously limited Hak Pakai (Right to Use) to Hak Guna Bangunan (Right to Build).

The average take-up rate for apartments in Jakarta stood at 87.9% in Q1 2025, slightly up from 87.8% in the same period last year, according to Colliers International.

Recovering tourism to boost the property market

Tourism continues to recover, with the total number of international visitor arrivals increasing strongly by 19.05% y-o-y to 13.9 million people, according to the Ministry of Tourism and Creative Economy. It is now the highest level seen in the past five years.

Yet the latest figures remain below the record-high of 16.1 million arrivals registered in 2019 before the Covid-19 pandemic. Arrivals plunged to just 4 million in 2020 and 1.56 million in 2021, mainly due to pandemic-related travel restrictions.

Bali, one of the world's top tourist destinations, saw its tourist arrivals surge to over 6.3 million people in 2024, up by about 21% from 5.23 million international tourists in the prior year. Arrivals in Bali were dominated by Australians, who account for about 25%, followed by tourists from India, mainland China, the UK, the USA, South Korea, France, Singapore, Germany, and Malaysia.

"Australia remains Bali's main tourism market, while the Chinese market has recovered significantly after being affected by the COVID-19 pandemic," said Bali Central Statistics Agency Acting Head Kadek Agus Wirawan.

Bali aims to welcome about 6.5 million tourists in 2025.

For the whole country, the government targets to attract around 14 to 16 million visitors this year.

In April 2025, foreign tourist arrivals in Indonesia rose by 9.15% y-o-y to an eight-month high of 1.16 million. Most international visitors came from Singapore, China, the United States, Japan, South Korea, India, Australia, and the United Kingdom. In the first four months of 2025, total arrivals reached 4.33 million, up by 5.6% compared to the same period last year.

"The number of foreign tourist arrivals in April 2025 reached 1,164,539, showing strong growth both monthly and annually," said BPS Deputy for Distribution and Services Statistics, Pudji Ismartini.

The recovering tourism sector, especially in Bali, is expected to provide a boost to the sluggish property market. An estimated 30,000 expatriates live in Bali.

Indonesia Tourist Arrivals graph

Indonesia adopts more liberal foreign ownership rules

Recently, Government Regulation No. 18 of 2021 on the Right to Manage, Right over Land, Strata Titles, and Land Registration became effective, amending Government Regulation No. 103 of 2015. The new regulation finally allows foreigners and foreign legal entities to own apartments in Indonesia.

However, foreigners are only able to own apartments in designated special economic zones, free trade zones, industrial estates, and other economic zones. Moreover, the property must be worth more than the minimum threshold, which differs depending on the province where it is located.

Accordingly, under the previous law, foreigners were only able to own land under the Right to Use land title and strata title right to use apartment units or SHPSRS ("sertifikat hak pakai atas satuan rumah susun"). GR 18/21 officially allows foreigners to own strata title rights of ownership of apartment units, too.

"Ownership rights to apartment units are granted to Indonesian citizens; Indonesian legal entities; foreigners who have permits in accordance with the provisions of laws and regulations; foreign legal entities that have representatives in Indonesia; or representatives of foreign countries and international institutions that are or have representatives in Indonesia," reads the full article 67.

Recently, the qualification for property purchases by foreign buyers was simplified, allowing them to buy property using only a passport and/or visa. Previously, foreigners were required to provide proof of a limited or permanent stay permit (KITAS/KITAP). The type of titles that foreigners can hold was also upgraded from the previously limited Hak Pakai (Right to Use) to Hak Guna Bangunan (Right to Build).

Earlier, in October 2020, the Omnibus Law on Job Creation was passed, which seeks to leverage foreign property investment as one of the pillars to stimulate economic growth after the pandemic.

"The potential of a foreigner being allowed to hold a (right-to-build) title in line with Indonesian citizens is a game changer. If it also allows for foreigners to mortgage in Indonesia, it will open up a much larger market than in the past when it was all cash-driven," said Terje Nilsen, CEO of Seven Stones Indonesia. "This will encourage foreigners to choose Indonesia as a first or second home option. Especially now, when more and more people work from home. And they can call Bali and other places in Indonesia home."

Before the recent measures, the last major liberalization came in December 2015, when GR 103/2015 on House Ownership of Foreigners Residing in Indonesia allowed foreigners to own landed houses in Indonesia for a period of up to 80 years. Under the law, foreigners can purchase a landed house or an apartment under the so-called "right-of-use" (hak pakai) title for an initial period of 30 years. The foreigner can extend the ownership twice, by 20 years and then by another 30 years. However, if the foreigner (or his heir) leaves Indonesia to reside in another country, then he/she needs to release or transfer the ownership rights to another person who meets all requirements.

Supply Highlights:


Jakarta's apartment supply continues to increase

In Q1 2025, South Jakarta led the strata-title apartment market with the completion of two projects-Apple 3 Condovilla and The Veranda Resort Residence (Jimbaran Tower)-which began their handover phase, adding a combined total of 708 units. This brought Jakarta's overall apartment supply to 230,755 units, marking a modest increase of 0.3% quarter-on-quarter and 1.7% year-on-year, according to Colliers.

NEWLY FINISHED PROJECTS IN JAKARTA, Q1 2025
Apartment Name Location Region Developer No. of Units
The Veranda Resort Residence (Jimbaran Tower) Lebak Bulus South Jakarta Pulau Intan & Nishitetsu 178
Apple 3 Condovilla Jl. Karang Indah, Lebak Bulus South Jakarta PT Diamond Land Development 530
Source: Colliers International

No new apartment projects were launched or relaunched during the period, highlighting developers' continued focus on selling existing inventory. This strategy aligns with the extended VAT incentive, which, similar to 2024, remains more advantageous for completed projects than for newly introduced developments. Future handovers are expected to remain concentrated in South Jakarta, reinforcing its position as a key hub for residential growth.

Currently, West Jakarta holds the largest share of existing apartment supply at 24%, a proportion expected to remain steady through 2027. It was followed by South Jakarta with 20% share, North Jakarta with 19%, Central Jakarta with 14%, CBD with 13%, and East Jakarta accounting for the remaining 10%.

With the launch of the new tower in the LRT City project and a year after the Jabodebek LRT began operations, several projects have emerged along the LRT line. This highlights the rising popularity of transit-oriented developments among investors and homebuyers.

According to Colliers, a total of 4,861 apartment units are scheduled to enter the market by 2027, with 51% expected within the remainder of 2025, followed by 25% in 2026 and 24% in 2027. South Jakarta is set to lead this pipeline, accounting for 72% of upcoming handovers.

STRATA-TITLE APARTMENT PROJECTS UNDER CONSTRUCTION
Apartment Name Location Region Developer No. of Units
2025
The Aspen Peak Residence by Rumapadu Jl. Fatmawati South Jakarta Harmas Jalesveva 320
Asthana Kemang (Sadewa Tower) Jl. Ampera Raya No.17 South Jakarta PT. Synthesis Development 362
Vittoria Residence (Tower Citrine) Jl. Daan Mogot West Jakarta PT. Duta Indah Kencana 312
The Belton Residence (was Prajawangsa City) Jl. Raya Bogor, Cijantung East Jakarta Synthesis Development 192
LRT City Tebet - The Premiere MTH (Orchid Tower) Jl. MT Haryono East Jakarta Adhi Karya 390
Savyavasa (3 Towers) Jl. Wijaya II South Jakarta Jakarta Setiabudi International & Swire Properties 431
B Residence Grogol Jl. Daan Mogot 79 West Jakarta MGM Propertindo 236
Adriya (North Tower) Jl. Pantai Indah Kapuk Boulevard North Jakarta ADR Group 108
Adriya (South Tower) Jl. Pantai Indah Kapuk Boulevard North Jakarta ADR Group 108
2026
South Quarter Residence (Tower E) TB Simatupang South Jakarta Intiland 336
Solterra Place (Tower Suites) Pejaten South Jakarta Waskita Realty 537
Asthana Kemang (Nakula Tower) Jl. Ampera Raya No.17 South Jakarta PT. Synthesis Development 362
2027
Antasari Place (was 45 Antasari) (Tower 2) Antasari South Jakarta Prospek Duta Sukses 621
Two Senopati (Tower 1) Jl Senopati II South Jakarta Asiana Group 112
LRT City Tebet - The Premiere MTH (Lotus Tower) Jl. MT Haryono South Jakarta Adhi Karya 201
Edensuite Casablanca Jl. Raya Casablanca Menteng Dalam South Jakarta TCP Internusa 233
Source: Colliers International

Funding boost for Tapera public housing savings program

Five years ago, the government enacted a law on public housing savings (Tabungan Perumahan Rakyat - Tapera) to create a new housing fund (BP Tapera) to help workers finance the purchase, construction, or renovation of their first home. All formal workers and individuals with monthly salaries of at least equal to the minimum wage must contribute 3% of their pay (2.5% from employees and 0.5% from employers). However, the contribution is voluntary for private-sector companies for the first seven years, until 2028.

The new housing fund officially took effect on January 1, 2021.

Participants have the option to withdraw up to 30% of their fund balance for the purchase of a home or up to 10% for construction or improvements. In addition, those who have already made at least 12 consecutive monthly contributions will have the option to take out home loans from BP Tapera at interest rates of no greater than 5% per year.

On May 24, 2024, an amendment took effect, bringing significant changes to how Tapera savings are calculated and how FLPP (Housing Financing Liquidity Facility) funds are allocated and managed.

During 2024, 200,300 housing units were distributed under BP Tapera, with a total value of IDR 24.57 trillion (US$1.52 billion). This amount includes the addition of 34,000 FLPP quotas last year.

"For 2024, the distribution of FLPP reached 100.15 percent or 200,300 housing units worth Rp24.57 trillion. This value includes the addition of a quota of 34,000 units from the original target of 166,000 units," said BP Tapera Commissioner Heru Pudyo Nugroho.

As for the Tapera mortgage financing, the government investment operator facilitated 5,940 housing financing contracts in 2024, amounting to IDR990.218 billion (US$61.15 million).

Heru stated that since BP Tapera took over the distribution of FLPP funds in 2022 until December 20, 2024, a total of IDR76.04 trillion (US$4.7 billion) has been disbursed, supporting the distribution of 655,300 housing units for low-income families (MBR).

Then in 2025, the budget allocation for FLPP was raised from IDR28.2 trillion (US$1.74 billion) to IDR35.2 trillion (US$2.17 billion) to support the increase in housing quota this year to 350,000 MBR units.

"I've received 100 percent backing from President Prabowo Subianto, the Ministry of Finance, Bank Indonesia, and the House of Representatives. The funding for FLPP is ready, and so is the program implementation," said Minister of Public Housing and Settlement Areas (PKP) Maruarar Sirait.

In Q1 2025, BP Tapera's FLPP facilitated the distribution of 53,874 subsidized housing units - a whopping increase of 1,173.9% as compared to 4,229 units in the same period last year.

"This marks the highest-ever FLPP realization. It confirms that the government's housing strategy is both pro-people and effective in raising living standards. It's a strong signal to housing developers to prepare sufficient inventory," said Maruarar.

The initiative is part of the government's 3 Million Housing Program.

Rental Market:


Rental yields remain moderately good

Gross rental yields on high-end properties in Indonesia are moderately good, at an average of 5.41% in Q2 2025, down from 6.12% in Q4 2024 and 5.68% in Q1 2024, according to research conducted by the Global Property Guide.

Although the current yields remain decent, they are significantly lower than the 10% to 13% levels seen a decade ago, as property prices have surged in recent years due to strong demand for high-end apartments.

Gross rental yields - the return earned on the purchase price of a rental property, before taxation, vacancy costs, and other costs - are an important consideration because a high rental yield indicates that the property market is reasonably priced.

By major areas, in Q2 2025:

  • In Jakarta, gross rental yields on apartments range from as low as 2.45% to as high as 12.18%, depending on location. The city's average rental yield stands at 4.03%.
  • In South Tangerang, apartment rental yields range from 5.42% to 7%, with a city average of 6.39%.
  • In Surabaya, apartments offer rental returns from 4.76% to 8.45%, with a city average of 6.62%.
  • In Tangerang, rental yields range from 4.64% to 5.2%, with a city average of 4.96%.
  • In Bali, gross rental yields range from 3.69% to 6.25%, with a city average of 5.05%.

This is consistent with the figures released by Colliers International, which showed that apartment rental yields in Jakarta have remained relatively stable over the past three years, averaging around 4%.

"Over the past three years, apartment rental yields have remained largely unchanged, stabilizing at ~4%," said Colliers.

"From a locational perspective, the CBD has consistently recorded the highest and most stable yields-4.3% over the past three years-supported by corporate tenants, expatriates, and professionals seeking premium amenities in prime locations. East Jakarta delivered the strongest yield growth, increasing from 3.1% in 2022 to 3.4% in 2024. This growth was driven by heightened demand due to the area's affordability, which enhances its appeal as a residential alternative for cost-conscious tenants, making it an attractive option for middle-income tenants and young professionals," added Colliers.

Rents increasing, but occupancy rates continue to fall

Apartment rents in Jakarta are now showing some improvements. In Q1 2025, rental rates in the CBD areas increased slightly by 1% to IDR469,332 (US$29) per square meter per month compared to the previous quarter. Likewise, monthly rents in non-CBD locations rose by a modest 2.8% q-o-q to IDR407,701 (US$25) per sqm over the same period.

"By the end of the year, further adjustments are anticipated as new serviced apartments enter the market, potentially impacting overall rental trends," said Colliers International.

Indonesia Monthly Rents on Serviced Apartments graph

Occupancy rates in Jakarta continue to decline. In Q1 2025, the overall occupancy rate of serviced apartments in Jakarta fell to 56.8%, down by 5.4% from the previous quarter.

"This downturn is primarily attributed to several key factors. Notably, government budget cuts and spending efficiency measures have significantly impacted apartment developments that rely on government-related tenants," noted Colliers. This has, in turn, affected the corporate sector, with some companies delaying leasing decisions amid economic uncertainty and project rescheduling-especially those involved in partnerships with government institutions.

"Furthermore, occupancy declines have also resulted from lease expirations, while some tenants have deferred renewals due to the Eid holiday, with new leases expected to commence in Q2 2025," added Colliers.

Property investment in Indonesia is unattractive, due to high tax rates

Despite the high rental yields, property investment is still relatively unattractive for foreigners because of complex legalities and high tax rates on non-resident owners.

  • The tax levied on the average annual income on a rental apartment/property in Indonesia is 20% which is the third highest in Asia, only after Bangladesh (25%) and Malaysia (22.4%).
  • A 10% Value-added tax (VAT) is levied on gross rental income.
  • Capital gains realized by individuals from the sale of real property in Indonesia are taxed at a flat rate of 5%. The tax base is the transfer value of the property, without any deductions.
  • Sales of luxury houses, apartments, townhouses, and condominium units with a selling price above IDR 30 billion (US$1.91 million) are subject to 20% sales tax.
  • Property tax is levied at 0.5% on the assessed value of the property. The assessment value of taxable property is determined as a percentage of the deemed fair market value of the property.

The total cost of buying and then reselling a residential property (including registration costs, real estate agent fees, legal fees, sales, and transfer taxes) is one of the highest in the region. However, changes in the law are in process, which should make things much easier.

Mortgage Market:


Key interest rates kept steady

Bank Indonesia kept its key interest rate unchanged at 5.50% during its June 2025 policy meeting, following a 25-basis-point rate cut in the prior month. The central bank also maintained the deposit facility (DF) and lending facility (LF) rates at 4.75% and 6.25%, respectively.

The central bank's recent move was backed by easing inflation, stabilizing the rupiah exchange rate, and the government's ongoing measures to support economic growth.

"The decision is consistent with low and controlled inflation projected in 2025 and 2026 within the 2.5%±1% target corridor, rupiah exchange rate stability in line with economic fundamentals amid persistently high global uncertainty and the ongoing need to drive economic growth," said the central bank. "Bank Indonesia continues strengthening its monetary policy response, which includes optimising its pro-market monetary operations strategy to improve monetary policy transmission through the interest rate channel after the recent reduction in the BI-Rate."

Following the BI's recent rate cuts, mortgage interest rates in Indonesia have gradually stabilized in recent months. Currently, mortgage interest rates range from 8% to 10%.

Indonesia Key Interest Rate graph

Mortgage market continues to grow, albeit at a slower pace

As interest rates stabilize, the total amount of outstanding residential mortgage loans - including loans for housing, flats, and apartments - drawn to households rose by 8.6% y-o-y to IDR 774.43 trillion (US$47.83 billion) in April 2025, according to figures from Bank Indonesia.

The average annual growth rate of residential mortgage loans dropped significantly-from a robust 35.2% between 2003 and 2013 to just 9.4% per year during the 2014 to 2024 period.

By property type, as of April 2025:

  • Houses: IDR742.45 trillion (US$45.85 billion) outstanding loans, up by 8.7% from a year earlier
  • Flats and apartments: IDR31.98 trillion (US$1.98 billion) outstanding loans, up by 7.7% from a year ago

Indonesia Residential Mortgage Loans by Property Type graph

By type of financial institution, as of April 2025:

  • State banks: IDR456.23 trillion (US$28.18 billion) residential mortgage loans, up 11.2% from a year earlier
  • Regional government banks: IDR31.61 trillion (US$1.95 billion), up by a modest 3.5% from the same period last year
  • Private national banks: IDR286.45 trillion (US$17.69 billion), up by 5.7% from the previous year
  • Foreign banks and joint banks: IDR141 billion (US$8.71 million), down by a huge 87.9% from the prior year

Despite this, the ratio of mortgage credits to GDP remains very small, at around 3.3% in 2024, barely changed in the past decade, based on figures from the Global Property Guide.

Indonesian developers find financing challenging. Memories of the Asian crisis are still alive. Banks tend to be extremely cautious in extending housing loans to the real estate industry, although Indonesian banks are strong and adequately capitalized. The increased uncertainty brought by the pandemic, Russia's invasion of Ukraine, and global supply chain disruptions have exacerbated the situation in recent years.

That's why, as of Q1 2025:

  • 77.28% of residential property development projects were financed internally
  • Only 16.62% were financed through bank loans
  • The remaining 6.1% of projects were financed by consumer payments (pre-selling)

Indonesia Residential Mortgage Loans Outstanding graph

Socio-Economic Context:


Economy remains resilient despite global headwinds

Indonesia's economy was estimated to have expanded by a robust 5% during 2024, following annual growth of 5% in 2023, 5.3% in 2022, 3.7% in 2021, and a pandemic-induced contraction of 2.1% in 2020.

"Indonesia's prudent fiscal, monetary, and financial policy frameworks have provided the foundations for macro-stability and social gains," said Ms. Maria Gonzalez of the International Monetary Fund (IMF). "Decisive policy actions facilitated a robust recovery from consecutive global shocks since 2020. Indonesia's growth remains strong despite external headwinds, inflation is low and well-contained, the financial sector is resilient, and policies are generally prudent and geared towards preserving buffers."

Despite a slight slowdown in early 2025 due to softening domestic demand, the economy continues to show healthy and resilient growth. The country registered a real GDP growth rate of 4.87% in Q1 2025 as compared to a year earlier, slightly down from y-o-y expansions of 5.02% in Q4 2024, 4.95% in Q3, 5.05% in Q2, and 5.11% in Q1, based on figures released by Statistics Indonesia. It marks the lowest growth recorded since Q3 2021.

In Q1 2025:

  • Government spending declined by 1.38% y-o-y, in contrast to an increase of 4.17% in Q4 2024.
  • Private consumption increased by 4.89%, slightly lower than the 4.98% growth in the previous quarter.
  • Fixed investment grew by 2.12%, a sharp slowdown from the 5.03% growth in the prior quarter.
  • Export growth moderated to 6.78%, from 7.63% in the previous quarter, reflecting subdued global demand. Likewise, import growth also decelerated to 3.96%, as compared to the 10.36% increase seen in Q4 2024, amidst weaker domestic purchasing power.

Quarter-on-quarter, Indonesia's economy contracted by 0.98% in Q1 2025 - its first quarterly decline in a year.

Despite this, the government has retained its GDP growth target at 5.2% in 2025. However, Indonesia's Finance Minister recently warned that new U.S. tariffs could lower the domestic economy's growth by 0.3 to 0.5 percentage points.

"Indonesia is one of the least trade-dependent economies in the region, and we don't think Trump tariffs will have a huge direct impact on the economy," said Capital Economics senior Asia economist Gareth Leather. "Nevertheless, Indonesia will still feel the impact as the recent decline in commodity prices weighs on export earnings."

Recently, both the International Monetary Fund (IMF) and the World Bank have downgraded their economic growth forecasts for Indonesia. Citing slowing global growth-driven largely by geopolitical tensions, trade disputes, and evolving monetary policies in advanced economies, institutions now project Indonesia's GDP to grow by 4.7% in 2025.

Indonesia GDP Growth and Inflation graph

Before the Covid-19 pandemic, the country enjoyed two decades of uninterrupted economic growth. Indonesia's resilience can be attributed to its very domestically driven economy. It tends to be insulated from global economic shocks. In fact, in recent years, Indonesia has enjoyed robust economic growth despite the global crisis. From 2000 to 2019, the economy expanded by an average of 5.3% per year, based on IMF figures.

Inflation remains manageable. In June 2025, the overall inflation rate stood at 1.87%, slightly up from 1.6% in the previous month but still lower than the 2.51% seen in the same period in the prior year, according to Bank Indonesia. This remains well below the central bank's target range of 2% to 4%.

From an average of 9.5% from 2001 to 2008, inflation dropped to an annual average of 4.7% from 2009 to 2019 and further to 2% in 2020 and 1.6% in 2021. But it surged again to 4.1% in 2022 and remained elevated at 3.7% in 2023. In 2024, inflation eased to an average of 2.3%.

In Q1 2025, the nationwide unemployment rate was 4.76%, slightly down from 4.82% in the same period last year and the lowest level registered since 1997, according to Statistics Indonesia. Labor force participation rate also increased to 70.6% from 69.8% in the prior year. Yet the total number of unemployed people in Indonesia edged up by 1.1% from a year earlier, to 7.28 million in Q1 2025.

Nationwide unemployment averaged 5.8% in the past decade.

Indonesia Unemployment Percentage graph

Rupiah remains weak, public finances still manageable

The Indonesian rupiah depreciated by 16% since January 2020 to reach an average monthly exchange rate of IDR 16,306 = USD 1 in June 2025. This follows a cumulative 4.4% decline in the value of the rupiah against the U.S. dollar from 2016 to 2019.

The Indonesian rupiah has weakened significantly due to a mix of global and domestic factors. Rising U.S. tariffs and global uncertainty have triggered capital outflows, while concerns over President Prabowo's fiscal policies-such as increased spending and widening deficits-have shaken investor confidence. Domestically, a growing current account deficit and heavy import reliance have added pressure.

Bank Indonesia's efforts to stabilize the rupiah involve the implementation of a pro-market monetary policy through market mechanisms. Despite the central bank's interventions, the rupiah remains near a 27-year low.

Though the rupiah is projected to stabilize and gradually strengthen in the second half of 2025, supported by expectations of a weaker U.S. dollar, improved fiscal clarity, and continued intervention by Bank Indonesia. Analysts anticipate a rebound from earlier lows, with the currency potentially trading in the range of IDR 15,975 to IDR 16,200 per USD as market confidence improves.

Indonesia Monthly Average Exchange Rate graph

The country's fiscal deficit amounted to IDR507.8 trillion (US$31.36 billion) in 2024, which was equivalent to about 2.29% of GDP last year, lower than the government's earlier forecast of around 2.7%. However, it remains higher than the 2023 shortfall of about 1.65% of GDP. Government revenues increased by 2.1% last year as compared to 2023, reaching IDR2,842.5 trillion (US$175.55 billion). Meanwhile, government expenditures totaled IDR3,350.3 trillion (US$206.91 billion), marking a 7.3% rise from the previous year.

Indonesia is projected to record a significantly wider budget deficit this year, driven by weaker revenue collection and the accelerated rollout of President Prabowo Subianto's priority programs.

According to Finance Minister Sri Mulyani Indrawati, the deficit is expected to reach 2.78% of GDP-above the original 2025 target of 2.5%. Excluding the pandemic years, this would mark the country's largest budget deficit in two decades. Yet Indrawati emphasized that the shortfall remains "manageable" and still within the legal cap of 3%.

The country's gross government debt reached around 40.2% of GDP in 2024, according to the IMF, not significantly different from 39.7% of GDP in 2023, 41.1% in 2022, 40.1% in 2021, and 39.6% in 2020. Yet it is far higher than the debt level of just about 30.6% of GDP in 2019 before the pandemic.

Indonesia General Government Gross Debt graph

Former military general Prabowo takes over with a pledge to sustain Jokowi's reforms

Joko Widodo ("Jokowi"), the Democratic Party nominee, became president of Indonesia on October 20, 2014. A man of the people, a campaigner for clean government, and a highly successful and popular former mayor of Jakarta, Jokowi was a symbol of the demand for reform.

Jokowi is popular for his ambitious infrastructure program, which includes various projects involving the construction and building of roads, railways, bridges, power stations, oil refining plants, seaports, airports, dams, and more. According to the Coordinating Ministry for Economic Affairs, 190 national strategic projects were completed from 2016 to 2023, with a total project value of IDR 1,515.4 trillion (US$93.59 billion).

Jokowi previously introduced a "Healthy Jakarta card" for health insurance, inaugurated the construction of the Jakarta MRT, and restarted the construction of the green line of the Jakarta Monorail. He also initiated programs aimed towards transparency, such as online taxes, e-budgeting, e-purchasing, and a cash management system.

The government has implemented some land reform, which involves the distribution of land certificates to the poor and offering lower taxes and financial services to buoy small businesses.

Jokowi won a second term in office during the April 2019 elections, beating former lieutenant-general and longtime rival Prabowo Subianto.

However, worrying trends toward corruption and authoritarianism have emerged. Bizarrely, he appointed Prabowo as his defense minister, despite the horrendous reputation of the former lieutenant-general, who was dishonorably discharged from the army for human rights abuses after the Asian crisis and has installed a large number of former regime members of Indonesia's late dictator Suharto's regime in his cabinet. There is also a growing tolerance of corrupt links between government and large conglomerates, reminiscent of the Suharto era, while amendments pushed through the Indonesian legislature in September 2019 have crippled Indonesia's once potent anti-corruption agency. After nine years in office, corruption was still rampant. But Jokowi remained wildly popular.

In the February 2024 elections, Prabowo secured a decisive victory over his rivals, former Jakarta governor Anies Baswedan and former Central Java governor Ganjar Pranowo, largely due to Jokowi's endorsement.

Prabowo was officially sworn in as Indonesia's new president in October 2024, together with his running mate Gibran Rakabuming Raka, Jokowi's eldest son. During his campaign, Prabowo pledged to continue Jokowi's development and infrastructure-focused policies.

Since taking office, Prabowo has launched several high-impact and controversial policies, including a massive expansion of free school meals, a IDR306 trillion (US$18.9 billion) budget reallocation, and the creation of the Danantara sovereign wealth fund. He also eased import restrictions and offered major trade concessions to the U.S. to avoid tariffs. Additionally, his proposal to shorten mining quotas to one year has drawn criticism from industry groups, while ambitious spending plans have raised concerns over fiscal sustainability and investor confidence.

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