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)