The decline in subsidised housing sales in 2026 is not merely a\ntechnical issue within the property industry, but a danger signal for\nthe national economy. This phenomenon reflects the weakening effective\ndemand from low-income communities (MBR) and serves as a test of the\neffectiveness of government housing finance policies.<\/p>\n
The current market condition is considered even more challenging than\nthe Covid-19 pandemic era. Data from the Association of Residential and\nHousing Developers (Himperra, 2026) notes that the primary issue in this\nsector is no longer supply, but market absorption. As of the end of\nSeptember 2026, the realisation of the Housing Finance Liquidity\nFacility (FLPP) had only reached 161,746 units, or approximately 46.2\nper cent of the annual target of 350,000 units (BP Tapera, 2026).<\/p>\n
From a public policy analysis perspective, this imbalance indicates a\npolicy mismatch. The government has been aggressive in deploying\nfinancing instruments\u2014such as a fixed 5% mortgage interest rate and long\ntenures\u2014yet has failed to resolve the main bottleneck on the demand\nside, which is the erosion of the real purchasing power of low-scale\nearners.<\/p>\n
The Paradox of Backlog and Mobility Costs<\/strong><\/p>\n Indonesia\u2019s housing sector is marked by a structural paradox. On one\nhand, the need for housing remains immense. The Central Bureau of\nStatistics, through the 2026 Housing Statistics, recorded a housing\nownership backlog of 9.29 million households, while the habitability\nbacklog reached 18.01 million households (BPS, 2026).<\/p>\n The problem is not a lack of need, but a lack of financial capacity\nto convert that need into effective transactions. Economist Mohammad\nFaisal (2025) emphasises that the affordability of subsidised housing\ncannot be measured partially by monthly instalments alone. Project\nlocations that are increasingly marginalised from work centres create\nballooning transportation costs.<\/p>\n This aligns with William Alonso\u2019s (1964) bid-rent theory in urban\neconomics, where the price efficiency of suburban housing is often\neliminated by high commuting costs. Therefore, public policy orientation\nmust shift from merely providing cheap housing towards providing\naffordable housing.<\/p>\n Bank Indonesia\u2019s Residential Property Price Survey for Q2-2026\nconfirms that primary property sales remain in a contraction zone of\n2.36 per cent year-on-year (BI, 2026). On the developer side,\ninflationary pressure on building materials has triggered proposals to\nadjust subsidised house prices by up to 15 per cent (Apersi, 2026). This\npresents a policy dilemma: raising prices will further eliminate\nlow-income earners from mortgage access, but freezing prices for too\nlong risks squeezing developer margins and halting supply.<\/p>\n Policy Structure Strategy and Economic Synergy<\/strong><\/p>\n To resolve this issue, the approach cannot rely solely on the\nproperty sector in isolation. The government must increase the real\nincome of low-income earners by creating quality jobs and cutting\nregulatory hurdles to facilitate ease of doing business. As John Maynard\nKeynes (193rag) asserted, the level of labour absorption and community\nincome is the primary foundation for driving consumption and effective\ndemand. Without the certainty of income from stable employment, even the\ncheapest financing instruments will be unable to stimulate public\npurchasing power.<\/p>\n For the community, amidst macroeconomic uncertainty, it is important\nto practice frugal living by suppressing non-essential expenditures to\nmaintain the saving rate. This aligns with Franco Modigliani\u2019s (1954)\nLife-Cycle Hypothesis, which states that managing consumption and\nincreasing savings during risky periods is key to household financial\nresilience against potential crises.<\/p>\n To achieve this, the government needs to redesign public housing\npolicy through five strategic steps: First, a transition to income-based\naffordability subsidies, where financing schemes are made more flexible\nand proportional. Low-income earners in the lowest income deciles\nrequire a larger portion of subsidies so that the debt-to-income ratio\ndoes not exceed the safe limit of 30 per cent.<\/p>\n Second, the integration of employment and housing policies.\nSubsidised housing programmes must be directly integrated with real job\nprovision and ease of entrepreneurship to ensure sustainable income\ngrowth. Third, the development of an early detection system for\nsubsidised mortgages. BP Tapera, the Financial Services Authority (OJK),\nand banks are advised to build early detection systems to monitor\npotential defaults or transfers of ownership. Policy success should not\nbe measured solely by mortgage disbursement figures, but by the ability\nof low-income earners to maintain their homes.<\/p>\n Fourth, measured and transparent price evaluations. Adjustments to\nsubsidised house prices should be conducted periodically based on\ntransparent calculations that account for the building material price\nindex, inflation, minimum wage, and the purchasing power of low-income\nearners. Fifth, infrastructure and area connectivity. The feasibility of\nsubsidised housing projects must include requirements for accessibility\nto public transport, educational facilities, and economic activity\ncentres.<\/p>\n The drop in subsidised mortgage absorption is an early warning of the\neconomic pressure experienced by lower-middle-class communities. The\nindicator of success for public housing policy can no longer be measured\nsimply by how many hundreds of thousands of housing units are built. The\nfundamental question for policymakers is: how many low-income families\nare truly able to afford and maintain decent housing without being\nsuffocated by the cost of living?<\/p>",
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