The Jakarta Post Jakarta

After experiencing a slump this year, the country's housing sector will see 11 percent growth next year with sales expected to increase to 110,400 units from 99,500 this year, a noted property analyst has said.

Panangian Simanungkalit, director of the Center for the Study of Indonesian Property (PSPI), said on Thursday that his forecast was based on the continued strength of the purchasing power of middle-class people and the expansion of housing loans provided by local banks.

Home loan interest rates are expected to decline to 18.5 percent next year, from 19.5 percent at present, he said.

The value of housing sales was expected to reach Rp 5.15 trillion (US$492.8 million) next year, he added.

"The low-cost housing sector will experience the sharpest increase, of between 52 and 57 percent," he was quoted by Antara as saying.

Next year, state-owned bank BTN, which specializes in lending for housing, will provide loans for the purchase of 5,000 "very low-cost" houses, 20,000 "low-cost" houses and 27,600 more expensive houses, while private bank lending will finance the purchase of 45,500 low-cost houses, 9,400 mid-type houses and 2,900 luxury houses, Panangian predicted.

According to Panangian, housing sales declined by 26 percent this year compared to last year due to a decrease in housing loan subsidies from the government and the increase in home loan interest rates in the commercial sector.

Sales of very low-cost houses dropped by 69 percent and low- cost houses by 53 percent, while non-subsidized low-cost housing recorded sales growth of between 22 and 30 percent, he said.

The value of housing sales is expected to increase by eight percent to Rp 3.78 trillion this year from Rp 3.49 trillion last year.