House sales set to rise this year, say consultants

The Jakarta Post, Jakarta

House sales in 2003 will grow relatively strongly at around 29 percent despite the recent utility price hikes, according to a property consultancy firm.

Panangian Simanungkalit, director of the Indonesian Property Study Center (PSPI), said on Wednesday that sales were projected to reach Rp 7.1 trillion (US$798 million), compared to Rp 5.5 trillion in 2002.

He was quoted by Antara as saying that the simultaneous utility price hikes would not have a significant impact on house sales.

He argued that sales would be much more affected by the availability of housing loans and the interest-rate environment.

"The current relatively low interest rates will be sufficient to increase housing sales this year," he said.

The Bank Indonesia benchmark interest rate has declined from over 17 percent at the beginning of 2002 to around 12.89 percent currently. The interest rates on mortgages now stand at between 17.5 percent and 19.5 percent.

He acknowledged, however, that the increases in fuel prices, and electricity and telephone charges would push up the price of houses by between 12 percent and 20 percent.

The PSPI predicted that in 2003, some 137,550 new houses would be sold, a 25 percent increase over the 110,400 units sold last year.

The firm said that the greatest number of sales would consist of medium-to-small houses worth between Rp 40 million and Rp 80 million.

The company added that people would still focus on buying houses in areas located near Jakarta like Bumi Serpong Damai, Bekasi and Bogor.