With total population of 262 million as of 3 January 2017, Indonesia sits on the 4th place among the countries with highest population. According to Statistics Indonesia (BPS), population growth in Indonesia is 5% on average in every 5 years. It is predicted that the total population of 255.4 million in 2015 will grow to 271 million in 2020, and reach 284.4 million in 2025.
Meanwhile, it was claimed that housing backlog in Indonesia was 11.4 million units as per 2015, supported with BPS data stating that the number of house owners in the same year was approximately 82.6%, which means that the rest of the households in the country stayed with their family members, rented, or did not even have a house to stay. The government had launched a “One Million Houses” project in 2016 to resolve the issue, but of course it’s still a long way to go to overgrow the imbalance number of the available houses that can be provided by the government with the (increasing) number of population.
Such condition where the supply can’t fulfill the market demand has caused the property price to surge. In fact, as stated in Bisnis.com, average property price increase per year in a stable economic condition is 10-20%. If you related the number with our inflation rate that is around 3.5% in 2016, property is really not a bad investment, compared to savings or term deposits that currently offers the rate of approximately 5-7% per annum (gross) only. That’s why it wouldn’t make it any easier for those who delay on buying properties, because the price will keep climbing as long as the condition stays this way.
Once we bought a property, apart from the fact that we could use it to be our shelter, our house/apartment/land can actually generate income. How?
1. Price gain
Of course, as the impact of property price growth, we would obtain some yields when we sell the property some years ahead. Being pessimistic with growth prediction of 10%, a house with a valuation of IDR 100 million this year can worth IDR 259 million (over 2.5x!) in 10 years.
2. Rental Fee
There are some ways to lease, which are monthly, annually, or even daily through websites like Airbnb. If you applied for home loan to buy your property, the income would definitely help you to pay the installment.
I realize that the property value in Indonesia has not rocketed like it was in 2010-2013, but it still increases nevertheless. As long as the number of available houses can’t keep up with the expansion of our population (plus, the land – where the properties are built on - doesn’t get larger either, right?), there will always be demands on property, that makes it still one of the best investment instruments in the market.