Real estate body cuts housing sales forecast

Real estate body cuts housing sales forecast

Indonesia's real estate association cut its forecast for new home
sales this year by as much as 20 percent because higher fuel
costs slowed demand for houses.

The Indonesian Real Estate Developers Association reduced its
forecast to as low as 80,000 homes from the previous estimate of
100,000, said Lukman Purnomosidi, chairman of the association.

The inflation rate in Southeast Asia's biggest economy
probably remained near a six-year high in November after the
government more than doubled fuel prices causing an increase in
transportation and food prices.

President Susilo Bambang Yudhoyono's government on Oct. 1
almost tripled kerosene prices and more than doubled diesel
tariffs on Oct. 1.

Gasoline prices rose by 88 percent.

The association had to cut the forecast because "purchasing
power declined after the fuel price increase," Purnomosidi told
reporters on Wednesday

"For example, those who were able to pay Rp 500,000 (US$50) a
month housing loan installments may not be able to do it anymore
now because other expenses surged."

Consumer prices surged 17.9 percent in October, the fastest
pace in six years. Prices are expected to rise 17.4 percent in
November, according to the median forecast of 11 economists in a
Bloomberg survey.

Still, home sales this year may be 10 percent higher than the
73,000 sold in 2004 because of faster economic growth in the
first half of the year, Purnomosidi said.

Indonesia's gross domestic product expanded 5.3 percent in the
third quarter after growing 5.8 percent in the previous three
months and 6.2 percent in the first quarter, the fastest pace
since 1996. -- Bloomberg