Residential property prices in the primary market are showing an upward trend, marking a significant shift in the real estate landscape. According to the latest data from the Residential Property Price Index (IHPR) released by Bank Indonesia, residential property prices in the primary market surged by 1.74% year-on-year in the fourth quarter of 2023. While this growth rate is slightly lower than the previous quarter’s 1.96%, it still reflects a notable increase in property values.
This uptick in housing prices can be attributed to various factors, including a notable rise in the prices of small-sized properties, which saw a 2.15% year-on-year increase. Similarly, medium-sized properties experienced a price hike of 1.87% year-on-year, albeit lower than the previous quarter’s growth of 2.44%.
On the other hand, the prices of large-sized houses rose by 1.58% year-on-year, indicating a more modest increase compared to the preceding quarter.
A closer look at the data reveals that out of the 18 cities monitored, 10 cities witnessed an increase in housing prices during the fourth quarter of 2023. Cities such as Pontianak, Banjarmasin, and Manado saw notable spikes in property values, with year-on-year growth rates of 3.57%, 0.70%, and 0.32%, respectively.
Despite the surge in housing prices, the primary market also saw a corresponding increase in home sales during the same period. This uptick in sales, which registered a growth rate of 3.27% year-on-year, marks a significant improvement from the previous quarter’s contraction of 6.59% year-on-year.
Moreover, the increase in home sales was observed across all property types, particularly in medium-sized and large-sized houses, which recorded growth rates of 6.29% year-on-year and 19.93% month-to-month, respectively.
While sales of small-sized houses also showed improvement compared to the previous quarter, they still remained in the contraction zone, albeit at a lower rate of 1.60% year-on-year.
Looking at the broader picture, the annual primary house sales remained robust, driven by the sustained strength of quarterly house sales in the fourth quarter of 2023. Despite not reaching the same heights as the previous quarter, the growth rate of primary house sales stood at 2.12% quarter-to-quarter, indicating a resilient market performance.
This continued strength in quarterly house sales was primarily supported by robust sales of small-sized and large-sized houses, which saw quarter-to-quarter growth rates of 3.81% and 1.22%, respectively. However, sales of medium-sized houses experienced a slight contraction of 0.62% quarter-to-quarter.
Nevertheless, despite the positive momentum in the housing market, there are several factors that continue to impede primary house sales. These include bureaucratic hurdles related to licensing, high mortgage interest rates, stringent down payment requirements, and taxation issues.
Addressing these challenges will be crucial in sustaining the momentum of the housing market and ensuring broader accessibility to homeownership for aspiring buyers.
