Sales of Small-Type Houses Plummet, Losing Appeal?

Jakarta – Sales of houses in the primary market fell sharply at the start of 2026, particularly for small-type houses that have long been the mainstay of the market. According to Bank Indonesia’s Residential Property Price Survey (SHPR) for the first quarter of 2026, overall residential property sales contracted by 25.67% year-on-year (yoy). This contrasts with the fourth quarter of 2025, when sales still grew by 7.83%. The deepest decline occurred in small-type houses. The BI report stated that sales growth for small-type houses contracted by 45.59% (yoy), down from a high growth of 17.32% (yoy) previously. Meanwhile, sales of medium-type houses grew by 8.28% year-on-year, reversing from a minus 4.84% in the previous quarter. Large-type house sales still contracted by 8.03%, though improved from a minus 10.95% previously. Not only sales, house price growth also slowed. BI recorded the Residential Property Price Index (IHPR) in the first quarter of 2026 growing by 0.62% year-on-year, lower than 0.83% in the fourth quarter of 2025. “The results of Bank Indonesia’s Residential Property Price Survey (SHPR) show that residential property prices in the primary market grew limitedly,” BI wrote in its report, as quoted on Monday, 11 May 2026. The slowdown occurred across all house types. Small-type house prices grew by 0.61% year-on-year, slowing from 0.76%. Medium-type houses grew by 0.88% from 1.12% previously, while large-type houses grew by 0.50% from 0.72%. By region, out of 18 cities surveyed, 10 cities experienced a slowdown in house prices and three cities recorded a year-on-year decline in house prices. Surabaya was one of the cities with the deepest weakening after house prices contracted by 0.27% year-on-year. On the other hand, Padang and Balikpapan still recorded house price increases of 1.21% and 1.44% year-on-year, respectively. BI also noted several challenges burdening the property sector. The biggest obstacle came from a 20.97% rise in building material prices, followed by permitting and bureaucratic issues at 18.15%, and mortgage interest rates at 16.47%. Additionally, high mortgage down payments and taxation factors remain constraints. Nevertheless, mortgage interest rates remained stable at 7.42% in the first quarter of 2026.