Rise in BI rate to hit hard property sector
Jakarta, (ANTARA News) - The rise in the benchmark interest rate or BI Rate to 9 percent from 8.75 percent will deal a blow to demand for property, a real estate developer predicted.
"We predict the key rate will continue to increase to up to 9.5 percent based on the full-year inflation rate forecast of 11.5 percent," Chief of the Indonesian Real Estate Developers Association (REI) Teguh Satria said on Tuesday.
Every 1 percent rise in interest on house/apartment ownership credit (KPR/KPA) would have an impact on prospective buyers, he said.
But he expressed optimism that the rise in the BI Rate would have a temporary impact on demand for property because the property market would gradually adjust itself to new lending rates until the end of September 2008.
"The impact will only last until September. The property market will gradually recover until the end of 2008 and grow rapidly at the start of 2009," he said.
Bank Indonesia (the central bank/BI) decided at its meeting on Tuesday to raise its key rate by 25 basis points to 9 percent from 8.75 percent, citing future risks of inflationary pressures from global crude and food price turbulence and demand pressure as reasons.(*)
"We predict the key rate will continue to increase to up to 9.5 percent based on the full-year inflation rate forecast of 11.5 percent," Chief of the Indonesian Real Estate Developers Association (REI) Teguh Satria said on Tuesday.
Every 1 percent rise in interest on house/apartment ownership credit (KPR/KPA) would have an impact on prospective buyers, he said.
But he expressed optimism that the rise in the BI Rate would have a temporary impact on demand for property because the property market would gradually adjust itself to new lending rates until the end of September 2008.
"The impact will only last until September. The property market will gradually recover until the end of 2008 and grow rapidly at the start of 2009," he said.
Bank Indonesia (the central bank/BI) decided at its meeting on Tuesday to raise its key rate by 25 basis points to 9 percent from 8.75 percent, citing future risks of inflationary pressures from global crude and food price turbulence and demand pressure as reasons.(*)