Indonesian consumer sentiment towards the national property market is experiencing a decline due to the instability of the global economy which is beginning to affect household consumption.
According to a study by Rumah.com Consumer Sentiment Study H1 2023, the study showed a decrease in the property market sentiment index from 59 points in the previous period to 56 points. The survey was conducted using online questionnaires at the end of 2022 with 1,000 respondents from across Indonesia.
Marine Novita, Country Manager of Rumah.com, attributed the decline to the global economic conditions marked by inflation and rising interest rates that are affecting consumers up to the household level. Marine noted that the study revealed that Indonesian consumers are forced to spend more on shopping, resulting in a reduction in their monthly savings allocation.
The impact of the global economy, including inflation and rising interest rates, has also affected the cost of living for Indonesian households, resulting in higher daily household expenses for 69% of survey respondents. 56% of respondents stated that inflation has reduced their monthly savings, while 46% of respondents have minimized their spending and expenses.
The survey showed that more than half of respondents, or 53%, will delay their property purchase plans until inflation subsides, while only 9% of respondents will cancel their property purchase plans. Meanwhile, 38% of respondents will proceed with their property purchase plans regardless of the inflation rate.
Marine further noted that if inflation continues, out of the 38% of respondents who will proceed with their property purchase plans, 63% of them will still pay whatever monthly installments are required, while the remaining 37% will try to reduce the amount of their monthly installments.
The study also showed that more respondents expect inflation and interest rates to increase, while fewer respondents are optimistic about the appreciation of property prices. Marine stated that 77% of respondents believe that there will be an increase in the interest rate, up 4% from the previous period, while 75% of respondents believe that there will be an increase in inflation, also up 4% from the previous period. Furthermore, 80% of respondents who were previously optimistic about the appreciation of property prices have reduced their optimism by 6%.
In the face of difficult conditions to buy a house, 70% of respondents agreed that the government should impose a progressive tax on owners of more than one property, especially for those who agree with the tax policy plan.