Govt raises prices of low-cost houses by 12%
Govt raises prices of low-cost houses by 12%
JAKARTA (JP): Following the 40 percent increase in cement
reference prices, the government yesterday announced an average
increase of 12 percent in the prices of low-cost houses.
State Minister of Public Housing Akbar Tandjung explained that
his ruling No. 4/KPTS/1995, dated April 11, divides low-cost
houses in terms of quality into "simple" and "very simple"
categories.
The very simple category covers houses of 21, 27 and 36 square
meters, while the simple ones include those of 18 and 21 square
meters.
Akbar explained that the government raised the price of very
simple houses of 21 square meters by 11.1 percent to Rp 5 million
(US$2,260) each, those of 27 square meters by 12.24 percent to Rp
5.5 million and those of 36 square meters by 14.75 percent to Rp
7 million.
According to the ruling, which was retroactive as from April
1, the price of simple houses of 18 square meters was increased
by 10 percent to Rp 8.25 million and those of 21 square meters
also by 10 percent to Rp 9.59 million.
Akbar said the maximum down payment for very simple and simple
houses of any type is 10 percent of the sale price, while the
maximum repayment time span for both categories is 20 years.
People with a monthly income of between Rp 200,000 and Rp
275,000 are only eligible to purchase the very simple type
houses, while those with a monthly salary of between Rp 450,000
and Rp 1 million are eligible to buy the simple type houses, he
said.
He emphasized that the recent cement price increase is not the
sole consideration for the government to increase the prices of
low-cost houses.
Other considerations behind the price increase, he said,
include last year's inflation rate of 9.24 percent, a six percent
increase of gross domestic products and decreasing profit margins
of the developers who build low-cost houses.
The minister actually hinted at the increase of low-cost
houses last February when he told a hearing with the House of
Representatives that the government would consider private
developers' demands for an increase in the prices of low-cost
housing. Developers claimed that the rising prices of land and
construction materials were reducing their profits.
Inflation
Freddy Nazar, an assistant to the State Minister of Public
Housing, predicted the current price increase in low-cost houses
would contribute only a little to this year's inflation rate.
"It's true that the housing sector has been the largest
contributor to inflation. However, it's not from the low-cost
housing projects but from the luxurious ones, including
condominiums," Freddy said.
He also questioned the integrity of big developers in
fulfilling the government's ruling which requires them to
participate in building low-cost houses.
"They cry for the price increase of low-cost houses. But do
they really build such houses?" Freddy asked.
Under a joint decree signed by ministers of public housing,
home affairs and public works, private developers are required to
apply a 1:3:6 housing scheme, which requires them to build six
low-cost houses and three medium-cost ones for each luxury house
they build.
The government has been subsidizing the sales of low-cost
houses by providing low interest loans. The new ruling from the
Minister of Public Housing requires banks to provide credits with
annual interest rates of 8.5 percent for the purchase of very
simple houses and of 11 percent for simple houses.
Meanwhile, Widigdo Sukarman, president of Bank Tabungan
Negara, the state-owned bank specializing in the provision of
loans for low-cost house purchases, said the new prices of low-
cost houses would not affect his bank.
"Our mission is clear. We want to secure the government's
program on the building of 100,000 low-cost houses every year,"
Widigdo told journalists after meeting with visiting South
African ministers.
For the sixth Five Year Development Plan period of 1994-1999,
the government has set a construction target of at least 500,000
low-cost houses.
Minister Akbar yesterday said that the state-owned developer
Perum Perumnas is committed to building 250,000 low-cost houses,
while private developers grouped in the Indonesian Real Estate
Association promised to construct 300,000 units and cooperatives
pledged to build another 60,000 units. (rid)