Colliers: New Subsidised Mortgage Policy Targets Middle Class
The Head of Research at Colliers Indonesia, Ferry Salanto, believes that the policy regarding the increase in income limits for subsidised mortgage (KPR) recipients can be directed towards the middle class.
This follows the government’s move to prepare a subsidised mortgage programme targeting workers with a fixed monthly income of up to approximately Rp17 million, featuring a 6 per cent interest rate and a maximum house price of Rp500 million.
“The expansion of the income limit to reach Rp17 million will primarily target the middle-income group of society that has previously been caught between two segments,” Ferry said when contacted in Jakarta on Monday.
He assessed that middle-class incomes may already be too high to meet the criteria for low-income communities (MBR) under the subsidy schemes currently in place.
“But at the same time, their purchasing power is actually not yet strong enough to comfortably purchase commercial houses, especially in major cities,” Ferry noted.
Furthermore, he stated that this group of people could be referred to as the “missing middle” in the housing market.
In terms of profile, this group is generally comprised of formal workers of productive age. Additionally, it typically includes young couples or young families, as well as private sector workers and professionals at entry to mid-levels who have relatively stable incomes but do not yet own their first home.
Ferry highlighted that the ability to purchase a house will be heavily influenced by house prices in the areas where this group works.
“This includes the size of the down payment, as well as monthly instalments, living costs, and transportation costs,” he said.
He assessed that this policy is quite relevant to implement in large cities such as Jakarta and its satellite cities, given that the issue of housing affordability is relatively severe.
“However, with a house price limit of Rp500 million, the challenge is finding suitable products in Jakarta, as landed houses at that price point are certainly limited,” Ferry remarked.
Ferry added that the implementation of this policy would likely be more realistic in satellite areas such as Bogor, Tangerang, and Bekasi, or could also be achieved through vertical housing products located closer to activity centres and public transport.
“So, in my opinion, housing policy should not only connect income levels with house prices, but must also take into account the location of the house in relation to the workplace,” he concluded.