KPR Expected to Become More Expensive as Property Developers Pull Back on Expansion

JAKARTA, KOMPAS.com - The rise of Bank Indonesia’s (BI) Rate to 5.25 percent on Wednesday (20/05/2026) is expected to affect property developers’ expansion plans. The Deputy Chairman of REI, Bambang Ekajaya, said property players are currently taking a cautious approach to doing business. He explained that the current strategy is to continue marketing projects that are already available while awaiting developments in market conditions. ‘Right now the best approach is to wait and see while continuing to market what exists,’ Bambang told Kompas.com on Wednesday (20/05/2026). He added that some developers are likely to delay plans to develop new projects until conditions stabilise again. ‘But new projects, in my view, should be held off until everything returns to normal,’ he said.

Furthermore, the rise in the BI Rate is expected to push up commercial interest rates, including for non-subsidised home loans (KPR). ‘The current conditions are challenging. The BI Rate rise will certainly push up commercial rates, including for non-subsidised KPR. It will surely weigh on both prospective buyers and borrowers currently repaying,’ he said.

Bambang noted that the BI Rate hike’s impact on the property market is not expected to be felt directly. He believes the effects will likely start to be felt in two to three months. On the other hand, the property market remains facing substantial challenges. ‘The effects will only be felt two to three months from now. Meanwhile, the property market remains difficult,’ he said.

Bambang added that pressure on the property sector does not come solely from potential increases in KPR rates. He noted that global conditions could also drive up construction costs. ‘Moreover, if the conflict in the Middle East is not resolved, construction costs will rise sharply. If you add rising KPR rates, buyers will surely hold back,’ he said. He added that such a situation could create layered pressures for the property industry. Prices may rise on the one hand, while purchasing power remains weak on the other. He stated that raising property prices is not an easy move for developers under current conditions. ‘As developers, raising property prices is not the right option when purchasing power is weak,’ he concluded.