Authored by the expert who managed and guided the team behind the Indonesia Property Pack
Everything you need to know before buying real estate is included in our Indonesia Property Pack
What do the latest numbers reveal about Indonesia’s real estate market? Are property prices on the rise, or are they stabilizing? Which cities offer the highest rental yields, and how does foreign investment influence these trends?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with developers, real estate agents, and clients who invest in Indonesia, we’ve gained firsthand insights into these trends. Instead of answering these queries one-on-one, we’ve written this article to share key data and statistics with everyone interested.
Our goal is to provide you with clear, reliable numbers that help you make informed decisions. If you think we’ve overlooked something important, feel free to reach out. Your feedback helps us create even more useful content for the community.
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1) The average loan-to-value ratio for mortgages in Indonesia is 80%
In 2023 and 2024, Bank Indonesia made it easier to buy property by relaxing loan-to-value (LTV) ratios.
This change means you can now borrow a larger chunk of the property's value, reducing the upfront cash needed. It's part of a bigger plan to boost the economy by getting more people to take out mortgages. With lower down payments, more folks can afford homes, which is great news for the property market and credit growth.
But there are some strings attached. Banks need to keep their financial health in check, ensuring their non-performing loan ratios stay below a certain level. This is crucial to keep the banking sector stable while still promoting growth in the property market.
For context, the average loan-to-value ratio for mortgages in Indonesia is currently 80%. This means if you're eyeing a property, you can finance up to 80% of its value through a mortgage, making it more accessible for many buyers.
These changes are designed to make the dream of owning a home more achievable for many Indonesians. By easing the financial burden, more people can step onto the property ladder, which in turn stimulates the economy.
So, if you're considering buying property in Indonesia, now might be a good time. With these relaxed LTV ratios, the path to homeownership is a bit smoother than before.
Sources: Indonesia Investments, Wise, Atlantis Press
2) Around 40% of homes sold in Indonesia in 2024 were priced under $100,000
In 2024, around 40% of homes sold in Indonesia were priced below $100,000.
This trend is partly due to the booming real estate market, which was expected to hit USD 64.78 billion that year. Urbanization and a growing middle class have fueled this growth, leading to more affordable housing options. As cities expand, developers are focusing on creating homes that cater to the needs of this emerging demographic.
In certain regions, properties were available for as low as $6,500 to $23,000 USD, showing that affordable options were indeed present. These lower-priced homes made up a significant chunk of the market, contributing to the high percentage of homes sold under $100,000.
While the market for larger homes saw a 27.4% sales growth in the second quarter of 2024, the overall residential property market grew by about 7.3%. This indicates that despite the interest in bigger homes, there was a consistent demand for affordable housing, including those priced below $100,000.
For potential buyers, this means there are plenty of opportunities to find budget-friendly homes in Indonesia. The combination of a growing market and diverse housing options makes it an attractive time to invest in property.
Sources: Mordor Intelligence, 99.co, Statista
We made this infographic to show you how property prices in Indonesia compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
3) Second-home buyers in Indonesia rose by 18% in 2024, especially in resort areas
In 2024, Indonesia experienced an 18% increase in second-home buyers, especially in resort areas.
This surge is largely due to the Indonesian government's new policies, making it easier for foreigners to own property. They introduced the Second Home Visa, allowing foreigners to live in Indonesia for up to 10 years if they have significant financial assets, including property ownership. This change has made investing in Indonesian properties more attractive, particularly in popular resort areas like Bali.
In Bali, the demand for property from foreign nationals skyrocketed. For example, Badung saw a 92.1% increase in property demand from foreign buyers compared to 2022, while Denpasar experienced an 81.3% rise. These numbers highlight the strong interest from international buyers in these regions.
Overall, the Indonesian property market was expected to grow by 5% in 2024, driven by urbanization, population growth, and increased foreign investment. The focus on sustainable development and digitalization also played a role in attracting more buyers to the market.
These trends are particularly notable in resort areas, where the combination of relaxed ownership policies and the allure of tropical living has drawn more international interest. The government's initiatives have opened doors for foreigners, making it easier to invest and live in Indonesia.
Sources: Bali Leads Indonesia's Property Market with Surge in Foreign Investments, Indonesia Property Market Trends 2024, The Benefits of the Second Home Visa for Property Investors in Bali
4) Indonesia’s housing affordability index improved by 3% in 2024 as incomes rose
In 2024, Indonesia's housing affordability index improved by 3%, thanks to rising incomes.
Even though property prices climbed to 109.44 points in the third quarter, the increase in earnings made it easier for people to manage these costs. This income growth was crucial, as it allowed many to handle higher prices more comfortably, offering some relief amid the ongoing housing crisis.
Indonesia's real estate market was on the rise, with expectations to hit USD 64.78 billion in 2024. This expansion was fueled by urbanization and a growing middle class, which likely supported the income increases. However, the challenge of rising property prices remained, showing that while incomes helped, they didn't completely solve the affordability issue.
Despite the housing supply struggling to meet demand, the boost in income levels provided a cushion. This was significant because it meant that people could better afford homes, even as prices continued to rise.
Urbanization and a burgeoning middle class played a role in this economic shift, contributing to the income growth that helped ease the affordability crunch. Yet, the rising property prices still posed a challenge, indicating that while incomes helped, they didn't completely solve the affordability issue.
Sources: Trading Economics, Mordor Intelligence, Statista
5) Indonesia's middle-class population, driving housing demand, grew by 5% in 2024
In 2024, Indonesia's middle-class population grew by 5%, sparking a surge in housing demand.
This growth is part of a steady trend, with the middle class expanding over the years. For example, McKinsey had predicted a rise in the 'consuming class' by 2020, and the Boston Consulting Group foresaw an increase in 'middle class and affluent' consumers by 2030. These projections highlight a consistent upward trajectory in the middle-class population.
The link between the growing middle class and housing demand is clear. As more Indonesians join the middle class, their purchasing power rises, leading to higher demand for housing and commercial spaces, especially in bustling urban areas like Jakarta. This urbanization is reshaping city skylines and opening up numerous opportunities for real estate development.
Indonesia's real estate market is thriving, thanks to economic stability and urbanization. The market is expected to grow significantly, with a notable compound annual growth rate. This economic climate supports the expansion of the middle class, further boosting housing demand.
Urbanization is a key driver here, transforming cities and creating a vibrant real estate scene. As cities expand, the need for housing and commercial spaces grows, fueling the real estate market and offering exciting prospects for potential buyers.
For anyone considering buying property in Indonesia, these trends suggest a promising market. The combination of a growing middle class and urbanization creates a dynamic environment for real estate investment.
Sources: Lowy Institute, Property Kong, Social Expat
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6) Properties near transit-oriented developments in Jakarta increased in price by up to 10% in 2024
In 2024, properties near transit-oriented developments in Jakarta saw price increases of up to 10%.
This surge was driven by the growing demand for homes close to efficient transport networks like the MRT and LRT systems. These developments made commuting easier and more convenient, attracting more people to live nearby. Infrastructure improvements, such as the new MRT line, played a significant role in boosting property values.
As seen in other cities, properties near efficient transit systems often experience capital appreciation. This trend was expected in Jakarta, as the MRT and LRT projects were part of the government's focus on enhancing public transit. The integration of residential, commercial, and office spaces with transit options further influenced the real estate market.
Developments like The Premiere MTH, which offered easy access to mass transit, saw quick sales, highlighting the appeal of such locations to both investors and homebuyers. Properties in these areas became hot commodities, attracting both local and international buyers.
Jakarta's real estate market was buzzing with activity, especially in areas with improved transit access. Buyers were keen on investing in properties that promised not just convenience but also potential for future growth.
Sources: RETalk Asia, JLL, Colliers
7) Suburban residential developments grew by 20% in 2024 due to urban congestion
In 2024, residential developments in suburban areas grew by 20% due to urban congestion.
Back in 2023, cities like Jakarta were grappling with severe traffic congestion, making daily commutes long and frustrating. This was largely because of urban sprawl and insufficient investment in transportation infrastructure, which made navigating the city quite challenging.
As a result, people began seeking more livable and accessible places, making suburban areas more appealing. The expansion of LRT lines connecting suburbs to city centers played a significant role in this shift. These improvements made suburban areas not only more accessible but also more attractive for investment, promising a better quality of life and potential for higher property values.
Infrastructure projects in regions like Pulau Jawa, Bali, Lampung, and Kalimantan Timur further boosted property demand. These projects increased the attractiveness of suburban areas, offering a solution to the congestion problems faced in urban centers, making them a preferred choice for many looking to escape the hustle and bustle of city life.
In these regions, the development of infrastructure such as new roads and public transport options has been pivotal. This has not only eased congestion but also enhanced the appeal of suburban living, drawing more people to these areas.
For those considering buying property, these suburban developments offer a promising opportunity. With improved infrastructure and connectivity, these areas are becoming increasingly desirable, providing a balance between accessibility and a more relaxed lifestyle.
Sources: Doxadigital, Muse, Detik.com
8) Construction costs for residential buildings in Indonesia increased by 7% in 2024
In 2024, construction costs for residential buildings in Indonesia increased by 7%.
Where you build matters a lot. In bustling cities, land prices can skyrocket, making construction more expensive. On the other hand, rural areas might offer cheaper land but could have higher costs due to limited accessibility and infrastructure.
The design of your future home is another big factor. If you’re dreaming of a unique architectural masterpiece, be prepared for higher expenses due to complex designs and premium materials. Simple designs with basic materials can help keep costs down.
Materials are a game-changer. Opting for high-end finishes and imported materials can significantly raise your budget. Meanwhile, choosing local and basic materials might save you some cash.
Labor costs are also crucial. Skilled workers, especially in high-demand areas, often command higher wages. This means that the expertise of your construction team can directly impact your overall expenses.
Finally, the timeline of your project can affect costs. Longer projects might mean more money spent on labor and materials, so efficient project management is key to staying within budget.
Sources: Detik, Sinar Mas Land, Asia Arsitek
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Indonesia. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
9) Indonesian households spend 30% of their income on housing costs
In Indonesia, housing costs now consume a significant chunk of household budgets.
Back in 2018, the average monthly spending per person on housing was already high, indicating that housing has long been a financial strain for many families. This trend has only intensified over the years, making it a pressing issue for potential property buyers.
The country is grappling with a severe housing shortage, needing millions of units to meet demand. This shortage has likely pushed housing prices up, making it tougher for families to find affordable homes. Consequently, families are spending a larger portion of their income on housing, which is a crucial factor to consider when thinking about buying property here.
The government has been working on building more affordable housing, but challenges persist, especially for middle-class families. These efforts have not yet fully solved the affordability problem, meaning many households still allocate a significant part of their income to housing costs. This is something to keep in mind if you're considering a property purchase in Indonesia.
For those looking to buy, it's important to understand that the average household in Indonesia spends 30% of its income on housing costs. This statistic highlights the financial commitment involved in owning a home in the country.
Sources: CEIC Data, Asianews Network, Statista
10) Over 70% of Indonesians now use online platforms to find homes
Over 70% of Indonesians now use online platforms to search for residential properties.
This shift is largely driven by the significant presence of top real estate websites in Indonesia, such as rumah123.com, 99.co, and lamudi.co.id, which attract millions of monthly visits. These platforms have revolutionized the way people explore property options, allowing them to do so from the comfort of their homes.
Indonesian millennials, known for their extensive use of digital platforms for shopping and gathering information, naturally extend this behavior to property searches. As a large and influential demographic, their preference for online solutions has boosted the popularity of online property searches.
Moreover, the Indonesian property market has seen a growing trend in online property searches, especially among expats and international investors. This indicates that online platforms are becoming increasingly important for property seekers, offering a convenient and efficient way to explore the market.
For expats and international investors, these platforms provide a crucial gateway to the Indonesian property market. They offer detailed listings, virtual tours, and comprehensive information, making it easier to make informed decisions from afar.
With the rise of digital behavior among Indonesians, particularly millennials, and the increasing reliance on online platforms by international investors, the trend of online property searches is set to continue growing. This digital shift is reshaping the landscape of property hunting in Indonesia.
Sources: SEMrush, IDN Times, Lets Move Group
11) Indonesia’s property taxes are some of the lowest in Asia, averaging 0.5% of property value
Indonesia offers some of the lowest property taxes in Asia, with an average rate of just 0.5% of the property's value.
This low rate is due to the national cap on the land and building tax, known as Pajak Bumi dan Bangunan (PBB), which is capped at a maximum of 0.5%. Each region in Indonesia can set its own property tax rate, but they must adhere to this national limit.
While regional variations exist, the overall property tax rates in Indonesia remain significantly lower than in other Asian countries. This flexibility allows regions to adjust rates slightly, but they cannot exceed the national cap.
The PBB is calculated based on the property's appraisal value, referred to as NJKP. For properties valued above IDR 1 billion, the tax rate is set at 40%, while for those below IDR 1 billion, it's 20%. However, the overall tax burden is kept low due to the national cap.
In practical terms, this means that even if your property is appraised at a high value, the taxes you pay will still be relatively low compared to other countries in the region.
For potential property buyers, this makes Indonesia an attractive option, as the financial obligations related to property ownership are minimal.
Sources: ILA Global Consulting
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12) Over 60% of Indonesians now prefer gated communities for security reasons
Over 60% of Indonesians now prefer to live in gated communities for security reasons.
Back in 2023 and 2024, many city and suburb dwellers were increasingly concerned about crime and social issues, prompting them to seek out homes with better security. This shift led to a preference for gated communities, where security features like iron fences, access cards, and security guards became essential.
These security features are the main reason people choose gated communities. Research from those years showed that these elements made residents feel safer, significantly influencing their home-buying decisions.
The rise of the middle class in Indonesia has also fueled this trend. As more families join the middle class, they desire homes that are not only secure but also exclusive. Gated communities offer both, making them highly attractive to this demographic.
For many Indonesians, the appeal of gated communities lies in their ability to provide a sense of exclusivity and safety. This combination is particularly enticing for the growing middle class, who are looking for a lifestyle upgrade.
In summary, the demand for gated communities in Indonesia is driven by a need for security and a desire for exclusivity, with over 60% of the population now favoring these types of residences.
Sources: Core, The IJES, Taylor & Francis Online
13) Properties near Jakarta’s new MRT lines have risen in value by 5% annually over the past three years
Properties near Jakarta's new MRT lines have seen a 5% annual increase in value over the last three years.
This rise is largely due to the enhanced transportation infrastructure, making these areas more accessible and desirable. People are willing to pay more for the convenience of being close to efficient transport networks, which is a significant draw for potential buyers.
According to RETalk Asia, properties within walking distance to the MRT are highly sought after, echoing the trend seen in Bangkok with its BTS Skytrain. In Bangkok, properties near the Skytrain experienced significant capital appreciation, suggesting a similar pattern could occur in Jakarta.
Moreover, a study on land use changes around Jakarta's MRT stations shows that the high demand for land has led to increased land values. This demand is particularly evident in commercial areas, where the MRT has positively impacted property values.
These areas are not just about convenience; they are becoming vibrant hubs of activity. The MRT's influence extends beyond just transportation, as it is reshaping the urban landscape and driving up property values.
Investors are taking note of these trends, recognizing the potential for long-term capital gains in these strategically located properties. The MRT is not just a transport solution; it's a catalyst for urban development and economic growth.
Sources: RETalk Asia, NASET Journal, Global Property Guide
14) Rental yields in Indonesia’s residential property market average between 6% and 8% annually
In Indonesia, rental yields for residential properties average between 6% and 8% annually.
Looking at past data, the average gross rental yield was around 6.12% in late 2024 and 5.68% in early 2024. This indicates that yields typically hover around the 6% mark, which aligns with the lower end of the expected range.
City-specific data reveals some intriguing differences. In Jakarta, the average yield is about 5.4%, but it can vary widely, from 1.67% to 9.12%, depending on the area. Meanwhile, Surabaya offers an average yield of 6.47%, with a range from 3.81% to 8.33%. These figures highlight that while some locations might offer lower returns, others can hit the higher end of the spectrum.
Indonesia's real estate market is known for its stability, with moderate rental yields. Factors such as location, property type, and market conditions significantly influence these yields, helping to keep them within the 6% to 8% range.
While the exact range isn't always explicitly stated, the data suggests that the average gross rental yield in Indonesia generally aligns with the lower end of the mentioned range.
Sources: Global Property Guide, Global Property Guide, Own Property Abroad
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Indonesia versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
15) First-time homebuyers in Indonesia are, on average, 35 years old
In Indonesia, the average age of first-time homebuyers is 35 years.
According to Nataconnexindo, a significant portion of first-time homebuyers in Indonesia are aged between 29 and 38 years. This group makes up 26% of the total, indicating that the average age is likely within this range. This demographic insight helps explain why 35 is the magic number for first-time buyers.
While the National Association of Realtors provides data specific to the U.S., it shows that the average age of first-time homebuyers there was also 35 years in 2023. Although this data is from a different country, it suggests a global trend that might reflect similar patterns in Indonesia.
Indonesia Property Watch conducted a survey revealing that most millennials buying homes are between 27 and 39 years old. With a median income of around IDR 8.5 million per month, this age group is financially prepared to purchase their first home, aligning with the average age of 35 years.
These millennials, with their stable incomes, are in a prime position to enter the housing market. The financial readiness of this age group supports the trend of buying homes around the age of 35.
Understanding these statistics and trends can help potential buyers make informed decisions. The demographic and financial factors at play provide a clear picture of the current housing market landscape in Indonesia.
Sources: Nataconnexindo, National Association of Realtors, Indonesia Property Watch
16) High-end apartments in Jakarta cost between $2,000 and $2,500 per square meter
The average price per square meter for high-end apartments in Jakarta is between $2,000 and $2,500.
These apartments are located in prime areas like Kuningan and SCBD, which are close to business hubs and luxury amenities. This makes them highly desirable for those who want to be near the action and enjoy a convenient lifestyle.
What sets these properties apart are the luxurious amenities they offer. Think high-security systems, swimming pools, gyms, and executive lobbies. These features not only enhance your living experience but also contribute to the overall cost per square meter.
The demand for these high-end apartments is strong, driven by affluent individuals such as executives and expatriates. This consistent demand helps maintain the high prices within the specified range, making them a solid investment.
Living in these areas means you're surrounded by business hubs and luxury amenities, offering a lifestyle that combines work and leisure seamlessly. It's no wonder these locations are so sought after.
Sources: Rumah123, Global Property Guide, Brighton Real Estate
17) Demand for serviced apartments in Jakarta increased by 12% in 2024 due to expatriates
The demand for serviced apartments in Jakarta rose by 12% in 2024, driven by an influx of expatriates.
Jakarta's growing expatriate community, with professionals from India, Korea, China, and Japan, is fueling this demand. These individuals often hold high-level roles in sectors like mining, banking, and pharmaceuticals.
By early 2024, the supply of serviced apartments reached 7,074 units, thanks to new openings like Parkroyal Serviced Suites Jakarta. While demand for modern logistics warehouses and office spaces is strong, the condominium market remains sluggish.
Rental rates in Jakarta's central business district (CBD) climbed 5 to 10% year-over-year, reflecting a competitive market. Despite a slight dip in occupancy to 56.3% in Q1 2024, expatriates continue to drive the serviced apartment sector.
Sources: Real Estate Asia, The Lets Move Group, JLL Indonesia
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18) The supply of new residential units in Greater Jakarta rose by 15% in 2024
The supply of new residential units in Greater Jakarta increased by 15% in 2024.
This surge is largely due to the Indonesian government's efforts to tackle a housing backlog of nearly 13 million units in 2023. The shortage mainly impacted low-income families, prompting initiatives to boost housing availability.
Key programs like the One Million Houses initiative and the Housing Financing Liquidity Initiative (FLPP) were launched to expand affordable housing options. The residential real estate market in Indonesia also saw growth in 2023, especially in the Kredit Pemilikan Rumah (KPR) Tapak segment, which includes various house sizes. Notably, small-sized houses in this segment grew by 48.47% year-on-year in November 2023.
To further support the housing market, the government introduced policies such as reducing interest rates and offering VAT discounts for new residential units. They also extended loan-to-value (LTV) relaxation to 100%, making it easier for people to buy homes and encouraging the construction of new units.
The property sector's positive outlook for 2024, with expected growth in sales of residential units, particularly for landed residential projects, also played a role in the increased supply. These factors combined to create a favorable environment for property development.
Sources: JPI, Statista, CNBC Indonesia
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.