House prices were up slightly by 0.3% y-o-y in Q3 2020

In the first time that house prices did not fall in the past two years, residential prices in the country’s 14 largest cities increased by a meagre 0.3% during the year to Q3 2020, following y-o-y declines of 0.52% in Q2 2020, 1.2% in Q1 2020, 0.65% in Q4 2019, and 1.68% in Q3 2019. House prices increased 0.43% q-o-q during the latest quarter.  

 

Demand is plunging

Residential property sales fell by 30.9% in Q3 2020 from a year earlier, following y-o-y declines of 25.6% in Q2 and 43.2% in Q1, according to Bank Indonesia. Sales saw double-digit rises from 2013 to 2015.

Housing loans disbursed by banks increased by a modest 2.05% y-o-y in Q3 2020, a slowdown from an annual growth of 3.5% in the previous quarter and 8.1% a year earlier.

Rents, rental yields: yields are high in Jakarta at 7.09%

Apartment costs in Jakarta are low, at around $2,595 per sq.m. 

Indonesia: typical city centre apartment buying price, monthly rent (120 sq. m)
	Buying price	Rate per month	Yield
Jakarta	$311,400	$1,840	7.09%

Recent news: Indonesia’s economy shrank by an annualized 5.32% in Q2 2020 and by another 3.49% in Q3 – the country’s worst economic downturn since the 1998 Asian Financial Crisis. Household spending and investment growth has fallen rapidly amid the COVID-19 outbreak.

Recently, the Indonesian government revised its 2020 economic forecast for the country to a range of -1.1% to 0.2%, down from its earlier estimate of -0.4% to 2.3% and its 2019 growth of 5%. Similarly, the IMF now expects Indonesia’s economy to contract by 1.5% this year, a downward revision from its earlier estimate of a 0.3% decline. Recently, the government unveiled a stimulus package worth around IDR 695.2 trillion (US$47 billion) to boost the slowing economy.