Indonesia’s residential property market recorded limited growth in the third quarter of 2025, according to the latest Residential Property Price Survey by Bank Indonesia. The Residential Property Price Index (RPPI) grew by 0.84% year-on-year (yoy), slightly moderating from 0.90% (yoy) in the second quarter.

This modest increase reflects a cautious market environment, where demand for mid- and high-end housing remains weak, despite continued positive sales in smaller residential units.

Small Units Drive Market as Larger Segments Slow Down

While the overall property market showed mild improvement, sales of medium and large residential units continued to lag behind. Bank Indonesia reported that total residential sales in the primary market experienced a 1.29% (yoy) contraction in Q3 2025—an improvement compared to a 3.80% (yoy) contraction in Q2 2025.

This trend highlights how small residential units continue to support market activity, providing a buffer against the slower recovery of larger property segments.

Developers Rely on Internal Funds Amid Limited Bank Financing

The survey also revealed that developers primarily financed projects through non-bank sources, particularly internal funds, which accounted for 77.67% of total capital in the third quarter of 2025. This indicates that developers are maintaining cautious financial management strategies amid subdued sales performance.

Meanwhile, housing loans from banks remained the main source of financing for consumers, covering 74.41% of total residential property purchases. This suggests that despite tighter financial conditions, homebuyers continue to depend on mortgage-based financing to access housing.

Market Outlook: Modest Growth Amid Financial Prudence

Bank Indonesia’s latest findings suggest a continuation of moderate price movements and cautious financing behavior within Indonesia’s housing market. Developers and buyers alike appear to be maintaining prudent strategies, reflecting ongoing adjustments to current economic conditions and consumer demand patterns.

PHOTO: UNSPLASH

This article was created with AI assistance.