Government Prepares Financing Schemes to Absorb Jakarta Housing Stock

Indonesia's government is actively seeking to clear the existing housing inventory in Jakarta by implementing diverse financing schemes. This strategic move is considered vital given the capital city's persistent challenges of scarce land and substantial housing needs.

Kreshnariza Harahap, Director of Systems and Strategy for Housing and Settlement Areas at the Ministry of Public Housing and Settlements, emphasized that providing housing units is only part of the solution. The greater challenge lies in ensuring these available homes are accessible to those who need them. "But how do we ensure that the houses that are already available can be connected with the people who need them through appropriate financing support?" he stated during a regional work meeting with the Real Estate Indonesia (REI) DKI Jakarta.

The meeting, involving central government, the Jakarta provincial government, and REI DKI Jakarta, focused on land scarcity and the high demand for housing. To address this, the government and property developers are prioritizing the optimization of existing housing stock. Efforts include expanding access to affordable vertical housing integrated with public transportation.

Key policy changes introduced through a Ministerial Decree aim to provide financial relief. These include extending loan tenors up to 40 years, offering interest rates starting at 6 percent annually or tiered interest, government-covered loan principal assistance, and converting down payment subsidies into processing cost subsidies for affordable vertical housing. For the Greater Jakarta area, the price of these units is capped between IDR 13 million and IDR 14.5 million per square meter, with unit sizes ranging from 21 to 45 square meters, specifically targeting low-income residents.

Additionally, the government is promoting "KPR Susun Inden" (off-plan vertical housing mortgage) and "KPR Danantara" schemes. KPR Danantara features tiered interest rates, starting at 2.75 percent for the first three years and rising to a maximum of 12.5 percent over a 30-year tenor. Harahap also urged developers to create housing products tailored to urban dwellers, particularly younger generations, to align with these new financing options.

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But how do we ensure that the houses that are already available can be connected with the people who need them through appropriate financing support?