Residential Property Market Thrives: Surging Demand for Medium and High-End Homes

Invest through Property

The residential property market in Indonesia, specifically the segment of landed houses, is currently experiencing a remarkable upswing, with a notable surge in market confidence regarding housing products. Recently, a distinctive shift in trends has emerged, notably concerning the supply side, as developers respond adeptly to the evolving demands of the market.

As highlighted by Arief Rahardjo, Director of Strategic Consulting Indonesia, the demand for mid-range landed houses has gained remarkable momentum, accounting for an impressive 26% of the overall housing demand.

Arief remarked, “We observe a shift in the offered segmentation, with developers now emphasizing higher-end options compared to the previously prevalent smaller housing units.” This statement was made during an interview on Thursday, July 27, 2023.

In parallel, the high-end segment of landed houses is also showcasing a robust increase in demand, constituting approximately 23.9% of the total units sold. Interestingly, the bulk of this demand stems from end-users, constituting a noteworthy 77% of the market share.

The end-user profile for buyers of landed houses primarily encompasses first-time homeowners as well as affluent families seeking spacious residences to cater to their growing needs and aspirations.

Turning to the supply side, the high-end segment claims a dominant position in the current supply landscape, contributing a significant 34.3% to the total new supply of 4,445 units during this semester. Following closely, the mid-range segment represents 27.3% of the new supply.

Arief elaborates, “The region of Tangerang stands out as the foremost contributor to the new supply, accounting for an impressive 51%, while Bogor and Depok jointly contribute 22%.” This indicates the developers’ unwavering faith in the market’s potential as they introduce upscale residential offerings across various housing developments.

Furthermore, this shift also reflects their firm belief in the market’s overall trustworthiness and prospects for continued growth.

As part of this transformative trend, residential property prices have surged, with improvements in road infrastructure and other amenities in the vicinity playing a significant role. Concurrently, construction costs have also contributed to the upward trajectory of property prices, leading to a positive impact on the overall market sentiment.

Moreover, the rapid advancement of transportation infrastructure has notably accelerated the appreciation of land prices, resulting in a substantial 4.49% average annual increase in property selling prices.

The latest data from Cushman & Wakefield Q2 2023 Marketbeat Reports reveals that the average transaction value per unit now stands at approximately Rp 2.08 billion, exhibiting a remarkable 15.6% increase compared to the first half of 2022.

In the vibrant Jabodetabek region, the average monthly net absorption rate now stands at 20 units per development during the first semester of 2023, indicating a 20.5% decline compared to the preceding year.

Despite navigating various challenges and fluctuations, the Indonesian residential property market continues to showcase remarkable resilience, driven by transformative trends and a burgeoning sense of confidence among both developers and end-users. This adaptability to evolving demands and commitment to infrastructure advancement sets the stage for a sustainable and prosperous future in the residential property sector.