If you look at the track record, the growth of the property sector in recent years has continued to decline. in 2019, the Indonesian Deposit Insurance Corporation (LPS) declared the housing or real estate sector to be the largest contributor to the current non-performing loan (NPL) ratio. LPS records show the real estate sector NPL of 3.7 percent.
In addition, based on a survey conducted by Bank Indonesia (BI), the growth in the Residential Property Price Index (IHPR) in the second quarter of 2019 was only 1.47% on an annual basis (year-on-year / YoY). The growth rate is the smallest since at least 2012.
According to BI, the increase in residential property prices occurred in all types of houses. The increase in the price of small type houses slowed from 3.18% in the first quarter of 2019 to 2.18% in the second quarter of 2019. Medium type houses slowed from 1.82% YoY to 1.32 YoY. The large type houses slowed from 1.16% YoY to 0.92% YoY.
However, in 2020, VISI predicts that the property sector will increase by 0.2666 points from 3.9767 percent to 4.2433 percent. Some positive sentiments driving the property sector increase include the political conditions in the country which are predicted to start stable after the elections, an increase in property investment and property prices that continue to rise and are predicted to continue to increase until 2020 with an increase of up to 9 percent. In addition, the residential property supply index is expected to grow at around 5 percent (y-o-y) by the end of 2020.
In order to meet targets by 2020, developers should focus on middle and upper-middle-class housing, highlighting investment prospects and supporting access to infrastructure and public transportation.
In addition, the appointment of East Kalimantan as a candidate for a new capital to replace DKI Jakarta brings blessings to property companies, especially those that already own land or projects in East Kalimantan. The capital development project is believed to have a good impact on the performance of property sector companies from 2020.
Stretching the growth of the property sector will bring up property development projects which will certainly involve the homeland contractor.