JAKARTA: Homeownership in Indonesia has been dropping since 1999 as house prices have risen. Now, the affordability of homes is under further threat as a number of people face declines in real income as a result of the pandemic.

       The national share of households with a home of their own fell to just over 80% last year from nearly 85% in 1999, according to data from Statistics Indonesia (BPS).

       Jakarta recorded the lowest share last year. The fall in Jakarta homeownership is in line with the share of households renting a home in the city, at 37.71% last year, higher than any other province, as workers flock to the capital to find jobs.

       Although some provinces ended up with a higher homeownership rate after the first 20 years of the century, Jakarta posted the steepest decline between 1999 and 2020.

       Now, fewer than half of all households in the capital city live in their own home, down from nearly two thirds.

       “It is indirectly related [to affordability],” said Wendy Haryanto, the executive director of the Jakarta Property Institute (JPI), a nonprofit that facilitates dialogue between the government and real estate firms.

       “The rise in our income is very little, while property prices have been rising Astronomically. So, the gap is increasing and housing is becoming less and less affordable,” Wendy told The Jakarta Post.

       The housing market has taken a blow from the pandemic-induced economic slump, as reflected in declining quarterly sales last year.

       However, sales have since rebounded, growing 13.95% year-on-year (y-o-y) in the January to March period, according to Bank Indonesia’s (BI) latest survey of developers in 18 cities.

       The growth was driven by a rebound in sales of homes measuring 36 to 70 square meters. The rebound has occurred as the government tries to spur consumer spending, including by relaxing the value-added tax (VAT) on houses worth less than 5bil rupiah (RM1.4mil) from March to August of this year.

       BI has also relaxed the loan-to-value (LTV) ratio to 100 % for the March to December period, up from between 85% and 95%.

       Despite falling sales, BI’s Residential Property Price Index, which measures house prices in 18 cities nationwide, has kept growing, albeit at a slower pace recently.

       The index grew 1.35% y-o-y in the first quarter and was projected to grow by 1.1% y-o-y in the second quarter.

       The fastest growth was 4.62% y-o-y in Manado, North Sulawesi, followed by Medan, North Sumatra; Pekanbaru, Riau; Yogyakarta; and Padang, West Sumatra.

       Wendy said average house prices kept growing in large part because the taxable value of property also kept rising, which was determined by the government every one or two years, depending on the region.

       A 2019 report from the World Bank found that the house price-to-income ratio for Jakarta was 10.3, nearly double that of New York in the United States. Bandung’s ratio was 12.1 and Denpasar’s 11.9.

       “Given the current land prices, it is no longer possible to develop affordable downtown housing, and there are limitations related to the height [of buildings] and everything,” said Wendy.

       In 2019, most households had no plan to buy a home, mostly because they already owned one, according to BPS’s National Social and Economic Survey from September 2019.

       More than one third of households cited a lack of money as the reason for not being in the market for a home.

       Among those who bought homes, 31.89% did so with a mortgage, BPS found. — The Jakarta Post/ANN