East Indonesia the fastest rising in the country

Bank Indonesia’s (BI) latest survey has revealed that property prices in major Eastern Indonesian cities have indicated an upward trajectory owing to the stronger purchasing power of its citizens and an increase in housing investments.

During the April to June period, the index of residential property prices in Manado of North Sulawesi, experienced the largest quarter-to-quarter rise of 9.5%, followed by Makassar in South Sulawesi, with an increase of 6.5%.

The rise of property prices within the two cities was significantly above the overall average of Indonesian cities. BI’s residential property prices index, including 16 major cities in Indonesia, only increased by 1.7% quarter-to-quarter during the same period.

The rise in house prices in Manado and Makassar is parallel with the economic growth within the two areas. They are both openings for economic development within the Eastern areas, consequently encouraging developers to continue developing residential properties.

The central bank showed no concern of a potential bubble within the housing sectors in Manado and Makassar, claiming the growth of property prices is actually healthy, mirroring a stronger purchasing power amongst citizens.

Those viewing a steep rise in prices were the big houses, according to the BI executive director for statistics, Hendy Sulistiowaty at a press briefing on Wednesday. This is positive in indicating that wealthy people are now increasing in numbers in the Eastern region of Indonesia.

BI’s report also reported potential acceleration in prices within other cities, over upcoming months.

In the third quarter of this year, housing assets in Bantam and Bandar Lampung were estimated to climb 4.8% and 6%, respectively, overtaking Manado and Makassar as the cities with the most rapid
growing property prices during that period.

For people wishing to invest in housing, Ferry Salanto, an associate director of research for Colliers International, claim they tend not to look towards well-established areas with already high prices — they seek areas still cheap in price, but with development potential.

The rapid economic growth within some resource-rich provinces of Eastern Indonesia also motivated demand for property, in turn accelerating housing prices.

BI has established various regulations to ease the country’s rapid growth of property prices, such as the loan-to-value ratio requirement, requiring customers to be able to provide a minimum 30% down payment prior to applying for a mortgage.