Developers on alert as BI Rate hike is expected to be felt in 2–3 months

JAKARTA, KOMPAS.com – The BI Rate increase to 5.25 percent on Wednesday (20/05/2026) is expected to affect the property industry. Deputy Chairman of REI, Bambang Ekajaya said that the impact of the BI Rate increase on the property market is not expected to be felt directly. He said the impact is likely to start to be felt in two to three months. On the other hand, the property market is currently facing quite heavy challenges. ‘Of course the effects will only be felt two to three months later. Meanwhile the property market remains difficult,’ he said when contacted by Kompas.com, on Wednesday (20/5/2026). In addition, the rise in interest rates will obviously affect the increase in commercial borrowing rates, including non-subsidised home loans (KPR). This condition is seen as potentially adding to the burden on the public, both for prospective home buyers and consumers still making instalments.

Bambang said the pressure on the property sector does not only come from the potential rise in KPR rates. He noted that global conditions can also influence construction costs. He said that if the situation of war in the Middle East has not abated, construction costs are expected to rise sharply. ‘Especially if the war in the Middle East has not been resolved, construction costs will surge. If KPR rates also climb, it will surely make buyers hold back,’ he said. He added that this situation could create layered pressure on the property industry. On the one hand, property prices have the potential to rise, while on the other hand purchasing power remains weak. Bambang said raising property selling prices is not an easy step for developers to take in the current conditions. In the midst of this situation, developers are tending to take a cautious approach to running their businesses. According to him, the strategy now is to continue marketing projects that are already available while awaiting market conditions to improve. ‘Right now the best course is certainly to wait and see while continuing to market what is already there,’ he said. He added that some developers are expected to delay new project development until conditions return to greater stability. ‘But new projects, in my view, should be held off until everything returns to normal,’ Bambang said.