Developers told to start building houses again

JAKARTA (JP): Developers must resume building houses now, before an anticipated surge in demand, a senior official from the Ministry of Settlement and Regional Development said on Saturday.

Opening a property exhibition, director general for Residential Development, Djoko Kirmanto, said many people would enter the housing market soon because of declining interest rates and this month's increase in the salaries of government workers.

Indonesia's property sector has barely recovered from the 1997 economic crisis, which saw sales of new houses plunge to as low as 55,000 sales last year from a high of 220,000 in 1997. The industry hopes the sales recovering to 90,000 this year.

The Indonesia Prime Property Fair 2000 at the Jakarta Convention Center involves 46 housing developers with projects in Greater Jakarta, Depok, Puncak, Sukabumi and Bandung.

Many of the participants are offering discounts of as much as 46 percent to woo buyers attending the fair, which will run through May 7.

The fair organizer, PT Dalas Pro Adhijaya, hoped the event would see transactions amounting to Rp 138 billion.

Dalas' president director, Padmiarso M. Widjojo, said, "With lower interest rates, people are thinking that it would be more profitable for them to invest in property."

He said now was the right time to buy property, before building material prices increased.

Djoko said recovery in the housing sector would, through a multiplier effect, boost development in 140 other related industries, including cement and roof tiles, which provide for the lives of many people.

To help the growth of the industry, Djoko said the government would assist people from low income groups to buy houses through a subsidized credit scheme.

The housing credit scheme to purchase small and very small houses offers an annual interest rates of 14 percent compared to the market rate of 20 percent.

Djoko said the Ministry of Finance has allocated a small portion of the Rp 1.3 trillion which his ministry proposed to finance the housing subsidy scheme in the 2000 fiscal year.

"The government is on a tight budget this year and cannot afford a large subsidy," he said. "But it is aware that the housing sector is very important to the people and to related industries." (10)