Indonesia Property Market Index Q4 2020 (English)

Wahyu Ardiyanto Indonesia Property Market Index Q4 2020 (English)
Showing some sign of the sector’s recovery, the third quarter of 2020, saw a price increase in the’s Indonesia Property Market Index (RIPMI). However, consumers’ interest towards property continues to be seen with a lens of ‘value for money.’ This has resulted in search to be diverted from central areas in Jakarta towards alternative locations, such as Tangerang, Bekasi, and other areas with more affordable prices.
In this year’s third quarter, the Indonesia Property Market Price Index (RIPMI Price Index) stood at 111.2, seeing a 0.5% surge on a quarter-on-quarter (QoQ) basis. However, it also represents a 0.5% slight decline on a year-to-year (YoY) basis. The slight quarterly increase was mostly driven by the landed house price index.
Meanwhile, the Indonesia Property Market Supply Index (RIPMI Supply Index) shows that supplies have been gradually growing since the first quarter of this year. The index stood at 144.7 in the third quarter of this year, a 10% jump from the previous quarter. This indicates growing interest and confidence from both consumers and developers.

Report Highlights

  1. Get The Guru View: Key Findings of the PMI Q4 2020
  2. Price Index Overview
  3. Supply Index Overview
  4. District Round-Up
  5. Area In Spotlight
  6. Mortgage Rate
  7. Conclusion
  8. Download the report

Get the Guru View:
Key Findings of The PMI Q4 2020

Price Index Overview: Quarterly Price Index Shows Signs of Recovery

The Indonesia Property Market Price Index (RIPMI Price Index) stood at 111.2 in the third quarter of 2020, rising 0.5% from the previous quarter. However, the price index declined 0.5% on a YoY basis.
Meanwhile, the price index for landed residential property was at 116.1 in the third quarter this year, a 1.13% increase from the same period last year, with a minor uptick of 1% on a QoQ basis.
However, for the apartment price index, the trends reversed. It stood at 112.8 in the third quarter of 2020, showing a slight 1.4% decrease from the same period in 2019. It also fell 1.05% from the previous quarter.
The drop in price index can be attributed to the slow and declining growth [especially in the second quarter] in several key markets of Indonesia, such as Central Java, Banten, and East Java.
Despite some of the regions’ steep decline in the second quarter, the property price index in the third quarter bounced back in most regions, except Yogyakarta which recorded a stable trend, and saw its unmoved QoQ price index at 134.6.
The third quarter of the property price index in Jakarta stood at 113.7, a 1.42% increase from the previous quarter. The most significant increase in the category was West Java, which recorded a 3.24% increase at 120.9 (QoQ).
Central Java saw a positive trend as it saw a quarterly increase of 2.6% to 115.4, while East Java’s index reached 93.1 in the third quarter this year, a slight uptick of 1.74% from the previous quarter.

Supply Index Overview: Property Supply Spiked in 2020

The RIPMI Supply Index has been gradually rising since the beginning of 2019. However, this year shows a slightly different trend from 2019 with the first and third quarters recording a spike in supplies.
As the COVID-19 pandemic hit the country this year, it resulted in a significant QoQ spike, recording the highest-ever supply index in three years, at 144.7 in the third quarter. It jumped 24.9% on a YoY basis and was up 8.3% from the second quarter of 2020.
Meanwhile, the Indonesian Property Market Supply Index for residential property was mostly contributed by Jakarta as the biggest suppliers with 32%, followed by West Java (28%), Banten (7%), East Java (14%), Central Java, and Yogyakarta (4%), and Bali (3%).
In both landed and apartment supply index, Banten recorded the index at 144.5 in the third quarter, which was an 11% significant increase on a QoQ basis. Jakarta reached 140.1 in the third quarter this year, up 5.2% from the previous quarter. West Java, meanwhile, also experienced a surge in this quarter of 12.2% to 140.9 in the index.

District Roundup: Satellite Areas Recover, West Jakarta Saw a Decline

In the third quarter, the RIPMI price index of Indonesia overall showed a surge compared to the second quarter of this year, as the domestic economic activity livened after the partial lockdown in the second quarter.
However, some districts in Greater Jakarta (Jabodetabek) recorded a slight decline in prices, including North Jakarta, West Jakarta, and Bogor. Meanwhile, the index recorded a significant rise, especially in Bekasi, South Jakarta, and Tangerang Regency.

Top-performing districts: 3 Districts Recorded a Bounce Back

Central Jakarta, South Tangerang, and Tangerang City are the three districts in Greater Jakarta that showed promising signs as they recorded a bounce back from decline in the second quarter. The strong growth was driven by the abundance of supply units and also the increase in price for each district in the landed residential category.
Central Jakarta recorded a 4.4% increase at 115.7 in the RIPMI Price Index in the third quarter compared to the previous quarter for both landed and apartment units, followed by South Tangerang that saw a 2% increase at 114 and Tangerang City which reached at 129.5 with a 2.2% increase.

Districts with the most price moderation: West Jakarta Overshadowed by Tangerang City

The districts with a decline in the RIPMI Price Index in the third quarter were West Jakarta at 106.9, representing a 0.3% decline on a QoQ basis, North Jakarta at 109.7 or down 0.2%, and Bogor at 111.7, a decrease of 0.8%.
"The decline in West Jakarta’s property price index could be influenced by the unequal property prices compared to its neighboring area, Tangerang City,” Marine Novita, Country Manager,
In the third quarter this year, property prices in Tangerang City were worth IDR12,5 million per square meter which is almost half the property prices in West Jakarta, IDRRp23,8 million per square meter.
"Tangerang City is now far more developed because there are so many middle-upper class townships built by highly-reputable developers. Despite the fact that it is a little further away from the capital city, consumers’ interest may shift towards Tangerang City as it offers more affordable property and adequate facilities. Such reasons have fueled the adjustment in the RIPMI Price Index in West Jakarta,” she added.

Supply Trend: Developer Focus on Launching New Supplies in Satellite Areas

Amidst the COVID-19 pandemic, some districts provided the largest supply in the landed property and apartments category. Bekasi stood at 146.8 in the third quarter which is an increase of 13.3% from the previous quarter. This strong supply trend was attributed to a leap in both apartments and the landed property supply category.
The South Tangerang district, which is at 141.1 showed an 11.9% increase from the previous quarter. Meanwhile, Tangerang Regency recorded a 10.7% increase at 202.7 in the RIPMI Supply Index.
According to the Marine Novita, Country Manager, , the surge in RIPMI Supply Index in satellite cities of Jakarta indicates that developers are now more focused on building middle-to-upper class property units with affordable land prices.
"Property prices in Tangerang Regency are now worth around IDR7.6 million per square meter, while Bekasi is priced around IDR9 million per square meter. It’s very affordable compared to Jakarta, which is at least worth around IDR20 million per square meter," Marine said.

Demand trend: Increase In Demand in Satellite Areas as Property Prices In Jakarta Rises

Despite the COVID-19 pandemic, people are still looking to purchase homes, according to the data from the analyzed three regions in the capital city and its greater regions comprising: Jakarta, Banten, and West Java area.
West Java demand jumped by 88.8% (QoQ) and 239% (YoY). Bekasi City, an area in West Java, recorded the highest surge, increasing by 115% (QoQ) and 265% (YoY), followed by Bogor with 94.3% (QoQ) and 275% (YoY).
Property search in Banten increased by 54.1% (QoQ) and 171% (YoY). Tangerang City became the district with the highest search rate increase in Banten with 64% (QoQ) and 174% (YoY).
Meanwhile, property search rates in DKI Jakarta showed a 59% increase on QoQ basis and 143% increase on a YoY basis.
The higher increase in search rates in Bogor, Bekasi, and Tangerang City (all part of Greater Jakarta) were mainly due to more affordable property prices, new middle-upper class townships and amenities built by reputable developers. New infrastructure, such as the highways have also made it more accessible and connected.

Areas In Spotlight: Tangerang and Cipondoh are The Hot Prospect for Q4 2020

Tangerang City RIPMI Price Index recorded a slight increase of 0.46% in the third quarter this year from the previous quarter. It also showed a jump in RIPMI Supply Index with a 10.5% increase (QoQ).
The rise in the supply index was due to the rise in landed houses and apartment indices. In the landed house supply index, Tangerang City stood at 129.5, showing a 10.4% surge (QoQ), and a 16.3% leap (YoY).
The increase in the price index of the landed houses shows a positive sentiment from developers and consumers as the country’s economic activity has been resumed and is currently moving forward. Two of the most performing areas in Tangerang City are Tangerang and Cipondoh area.

Growing Prospects in Tangerang and Cipondoh areas

Tangerang and Cipondoh are two areas in Tangerang City that offer great opportunities for buyers. assessed that Tangerang and Cipondoh are both promising neighborhoods since the areas provide easy access to numerous transportation options with comfortable surroundings for living.
Due to its closeness with West Jakarta, Cipondoh residents can enjoy a variety of class amenities. The area also offers green open spaces, with the Cipondoh Setu (lake/reservoir) located in the area.
Meanwhile, Tangerang is located in the heart of Tangerang City. It has two commuter line stations (Tangerang and Tanah Tinggi stops), with direct connection to West Jakarta. It also has at least five shopping malls in the area (including Tangcity Mall and Lippo Karawaci, two of the most famous ones).
Small to mid-tier developers, such as Duta Indah Group have been developing several clusters in its residential complex in Tangerang City. Meanwhile, regarding transportation, the city and district also provide inner-city toll roads, airport bus (Damri) services, mini-van services (angkot), private and government-operated bus services, such as TransJakarta and Mayasari Bakti.
The Greater Tangerang area has been considered as an expat-friendly district outside of Jakarta as the area offers several reputable private, international schools, along with international-standard business areas and a culinary haven.
Property developers, such as Sinarmas, which developed Bumi Serpong Damai (BSD) planned community, and Lippo Group, with its Lippo Karawaci planned community, have designed the area to be far more advanced than any other districts in other municipalities in satellite cities.
The Transportation Ministry has also announced early this year that the MRT line bound for South Tangerang has been added to the government’s plan. The MRT, which stretches around 20 km, will begin construction in 2022.

Mortgage Rate: Banks Need to Readjust Interest Rates to Stimulate Public Interest

The Indonesia Central Bank in August kept its benchmark interest rates or seven days repo rates at 4%, unchanged from the previous month. So far this year, the Central bank has reduced 100 basis points as a countermeasure for the economic impact amidst the COVID-19 pandemic.
With the BI rates remaining unchanged, banks have also slightly lowered the landed house mortgage and apartment lending rates. As of August this year, the landed house mortgage rates and apartment lending rates stood at 8.45% and 8.42% respectively.
Data source: Bank Indonesia
Despite lending rates being the lowest since 2018, it might not affect the property industry as much, since several experts deem it as still being high and expensive for consumers to purchase properties.
"By maintaining the BI 7-Day Reverse Repo Rate (BI7DRR) at 4%, and the Lending Facility rate at 4.75%, we hope that the banking industry can readjust interest rates to stimulate public interest in buying houses through the household loan credit (KPR) program with competitive interest rates based on the Central Bank benchmark rate," said Marine.


The quarterly increase of Indonesia Property Market Index in the third quarter of 2020 can be seen as a sign of industry’s recovery.
However, the yearly decline of RIPMI has become a sign that the property industry has not fully recovered yet. The property industry and national economy are yet to be free from the gloom of crisis and recession. Therefore, hard work from all the property industry stakeholders is still needed for the positive trend in the third quarter to continue.
Consumers’ interest towards property continues to be seen with a lens of ‘value for money.’ Areas in alternative locations, particularly around Tangerang and Bekasi still have the opportunity for a large RIPMI growth in the next quarter. This cannot be separated from the road infrastructure and transportation construction which always continues. The areas which previously were not attractive will be seen as more interesting since it is more easily accessed.

For more insights and analysis, read the full Indonesia Property Market Index Q4 2020 report:

Or, read past Indonesia Property Market Index Reports from 2020:

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