Millennials Lead Indonesia’s Property Market, with 55% Transactions

property market
property market

The Indonesia’s property market is currently showcasing remarkable resilience and dynamic shifts, with millennials emerging as key players in driving sales. In the first quarter of 2024, millennials accounted for a significant 55% of property transactions, underscoring their crucial role in the domestic market. This trend is particularly evident in the increased demand for first-time homes.

The latest Pinhome Indonesia Residential Market Report 2023 & Outlook 2024 highlights that millennials were behind 55% of Indonesia’s property transactions in Q1 2024.

“This highlights the pivotal role of the younger generation in propelling the property market, particularly amid shifts in interest towards emerging regions and a rising demand for rental homes due to increasing interest rates,” said Dayu Dara Permata, CEO and Co-founder of Pinhome, as cited by Bisnis on Tuesday (June 18, 2024).

The report indicates that the Indonesian property market continues to show resilience and dynamic shifts, influenced by various factors. These trends are in line with Pinhome’s previous reports that pointed to market resilience throughout 2023 and optimistic forecasts for 2024.

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Dayu Dara elaborated that the property market in Indonesia displayed exceptional strength in Q1 2024, driven by robust demand from first-time homebuyers and millennials, particularly in the affordable housing segment.

Pinhome’s findings reveal that millennials prefer homes priced between IDR 200 million and IDR 600 million, with Type 36 houses being the most popular.

“Bogor, Tangerang, and Bekasi have become top choices for millennials looking to purchase homes,” she added.

The 2024 election and the government’s Value Added Tax incentives (PPN DTP) are two major factors shaping the property market landscape in Q1 2024.

The election has induced caution among luxury property buyers, while the demand for affordable homes remains strong. This reflects the public’s need for housing that fits their financial means amid political and economic uncertainties. The Pinhome report also brings to light several other key findings.

Firstly, the demand for luxury homes has slowed during the election period. Interest in luxury properties has grown at a slower rate compared to the affordable housing segment, indicating a wait-and-see approach among luxury homebuyers.

Secondly, there has been a surge in interest in areas surrounding the new capital city (IKN). Samarinda and Balikpapan have seen significant increases in interest, over 20-fold and 4-fold respectively, indicating potential economic growth in these areas with the development of IKN.

Thirdly, VAT exemption incentives have accelerated home purchases. Although these incentives have spurred home-buying decisions by up to 25%, the policy’s deadline remains a critical consideration for buyers.

Fourthly, rising interest rates have impacted the rental market. Increasing bank loan interest rates have driven demand for rental homes, especially among millennials seeking more affordable housing options.

Pinhome projects that the trend of rising interest rates will continue, potentially leading to a decline in mortgage demand, but an increase in demand for mortgage takeovers and rental homes is anticipated.

“Pinhome will continue to innovate to provide solutions relevant to the evolving market needs, especially for millennials who are the main driving force in the current property market,” added Dara.

Internal data from Pinhome shows that 4 out of 5 Pinhome users are prospective first-time homebuyers. Pinhome offers home search services with 80% of the listings being affordable homes under IDR 3 billion, partnerships with various banks to provide financing, and property maintenance services.