Indonesian Residential Property Sales Growth Trends 2020-2024

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Indonesian Residential Property Sales Growth Trends 2020-2024

Indonesian Residential Property Sales Growth Trends 2020-2024

The Indonesian residential property market experienced fluctuations in property sales growth across different house sizes during the period Q1 2020 to Q1 2024. We will discuss the property sales growth trends per house’s type/size, potential influencing factors related to pandemic impact and economic indicators, and comparisons among small, medium, and large houses.

1. Trends by House Size

Small Houses

  • Volatility: Small houses exhibited the least significant volatility compared to medium and large houses.
  • Declines and Rebounds: Periods of sharp declines were observed during certain quarters, particularly around Q1 2021- Q3 2021, likely due to economic disruptions. However, these were followed by occasional rebounds, indicating resilience in this segment.
  • Affordability Factor: As the most affordable segment, small houses maintained relatively stable demand, even during economic downturns.

Medium Houses

  • Moderate Fluctuations: Medium houses showed more variability in sales growth compared to small houses. This may reflect a mix of affordability challenges and steady demand among middle-income buyers.
  • Recovery Trends: Medium houses recovered slower than small houses but exhibited stable growth in later quarters, suggesting a recovery aligned with broader economic improvements.

Large Houses

  • Highest Volatility: Sales growth for large houses was the most volatile, with significant swings observed during the analyzed period.
  • Luxury Sensitivity: Being luxury items, large houses were more sensitive to economic conditions, leading to sharp declines during downturns and slower recoveries.
Indonesia Country Report for Asean Valuer Association Congress 2024 (Mr Akhmad Akbar Susamto, Assistant professor at the Department of Economics, Faculty of Economics and Business, Universitas Gadjah Mada)
Indonesia Country Report for Asean Valuer Association Congress 2024 (Mr Akhmad Akbar Susamto)

2. Influencing Factors

Economic and Pandemic Impact (2020-2021)

  • COVID-19:

    The pandemic severely disrupted the market, with sharp declines in Q2 2020 for small and large houses. Economic uncertainty and lockdown measures reduced transaction volumes. Meanwhile, sales growth for medium houses during this time frame increased until Q1 2021 and then declined as the pandemic’s impact continued.

  • Stimulus Measures: Government policies, such as interest rate cuts likely contributed to the rebounds observed in small and medium house sales. These measures were particularly effective as they coincided with declining average mortgage rates, which improved home affordability for these segments.

Macroeconomic Indicators

  • GDP Growth: Indonesia’s economic growth, as highlighted in the broader GDP trends, reached a steady level of around 5% annually during the recovery period, which likely influenced property demand across segments. For instance, small and medium houses may have benefited from increased purchasing power among middle-income groups, while large houses saw more limited gains due to their reliance on high-net-worth buyers. This steady growth likely spurred demand for residential properties, particularly in the affordable segment. However, the relatively high growth rate has not yet lifted Indonesia out of its middle-income status, limiting its broader impact on large house demand.
  • Interest Rates: Lower borrowing costs may have encouraged homebuyers, benefiting small and medium houses more than large houses. The lower mortgage rates improved buyer affordability, making it easier for first-time buyers and middle-income families to secure loans for small and medium-sized properties. In contrast, the high price points of large houses meant that lower mortgage rates had a relatively smaller impact on affordability and demand in this segment.
  • Inflation: Rising inflation could have dampened demand for larger houses, which are more price-sensitive. For instance, as inflation reduced the purchasing power of buyers, transaction volumes for large houses declined more steeply compared to small and medium houses, particularly during quarters of peak inflation rates in 2022.

Buyer Behavior and Preferences

  • Affordability and Stability: Small houses may attracted buyers due to affordability and lower financial risk.
  • Middle-Income Buyers: Medium houses appealed to families seeking upgrades, albeit with budget constraints.
  • High-Net-Worth Individuals: Large houses faced a narrower buyer pool, making them susceptible to demand fluctuations.

3. Segment Comparison and Implications

Volatility Rankings

In this context, volatility refers to the degree of variation in sales growth rates over time. A segment with high volatility experiences larger and more frequent swings (ups and downs) in sales growth, whereas a segment with low volatility shows more stable and predictable trends.

  1. Least Volatile: Small houses.
  2. Moderately Volatile: Medium houses.
  3. Most Volatile: Large houses.

Market Resilience

  • Small Houses: Demonstrated resilience, likely due to steady demand from first-time buyers and low-income households.
  • Medium Houses: Showed moderate resilience, recovering alongside economic growth.
  • Large Houses: Experienced slow recovery due to their dependency on high-net-worth buyers.

Conclusion

The Indonesian residential property market has demonstrated diverse trends across house sizes from 2020 to 2024. Small houses remained the most resilient segment, while medium and large houses faced greater volatility. Economic factors, including Indonesia’s steady GDP growth rate of around 5%, buyer behavior, and government policies, have played pivotal roles in shaping these trends. Future strategies should focus on leveraging these insights to optimize development and investment decisions in the housing market.

Hope this helpful!

Regards,

Penilaian.id by Asti Widyahari

Property Valuer & Advisor

 

Source (Indonesian Residential Property Sales Growth Trends 2020-2024):

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Penilaian.id oleh Asti Widyahari

 

asti widyahariAbout Asti Widyahari 

Asti Widyahari is an experienced property valuer and advisor based in Jakarta, Indonesia, with extensive expertise in property valuation and property consultancy. She is the founder of Penilaian.id and CekNilai.id. Asti is also an active speaker at international conferences, promoting the property valuation profession and professional development in the sector.

Tentang Asti Widyahari
Asti Widyahari adalah Penilai dan Advisor Properti berpengalaman yang berbasis di Jakarta, Indonesia, dengan keahlian dalam penilaian properti dan konsultasi properti. Ia adalah pendiri Penilaian.id dan CekNilai.id. Asti juga aktif sebagai pembicara di konferensi internasional, mempromosikan profesi Penilai dan pengembangan profesional di sektor ini.

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