Subsidised Home Sales Plunge as Developers Propose a Solution

Jakarta, CNBC Indonesia — Disbursement of subsidised homes under the Housing Financing Liquidity Facility (FLPP) remains sluggish. As of 9 October 2026, 177,161 units had been financed, or about 50.6% of this year’s target of 350,000.

With less than three months remaining, boosting demand is one of the key challenges in meeting the target.

The Indonesian Association of Housing and Settlement Developers (Himperra) has proposed that the government raise the price ceiling for subsidised homes to Rp500 million. For this segment, developers have proposed mortgage rates of around 6%–8%, higher than the flat 5% rate currently offered under the FLPP scheme.

Himperra chairman Ari Tri Priyono said housing policy needed to reflect market demand and people’s ability to buy homes. Simply increasing supply would not be enough if prospective buyers still struggled to access housing suited to their financial means.

“We propose expanding the choice of subsidised homes by raising the price ceiling to Rp500 million. For this segment, we propose interest rates of around 6%–8%,” Ari told CNBC Indonesia on Monday (12 September 2026).

The higher ceiling is expected to give developers more scope to offer homes with a wider range of designs, quality and locations. Limited housing options near centres of economic activity have been a persistent problem, particularly for young people who want to live within a reasonable distance of work.

Housing needs are determined not only by the selling price but also by whether a home is located suitably for people’s daily activities. Expanding the range of subsidised homes could therefore provide an alternative for buyers seeking homes with better access to urban facilities.

“Housing policy needs to keep pace with changing market needs, people’s purchasing power and the challenges faced by developers. The slowdown in subsidised home sales cannot be addressed simply by adding supply; it also requires financing innovation and easier licensing,” Ari said.

Alongside the price ceiling, Himperra is calling for a review of subsidised mortgage interest rates. One option it has proposed is a fixed rate for the first 10 years under certain financing schemes, taking into account borrowers’ economic circumstances and repayment patterns.

“Some subsidised-home buyers are able to repay their loans early when their economic circumstances improve. Data on these early repayments could inform a review to make government funds more effective and extend support to other groups of buyers,” Ari said.

Any changes to the price ceiling or interest-rate arrangements would need to take account of prospective buyers’ ability to make repayments, the sustainability of FLPP funding and protections for low-income communities. The government must also ensure that a higher price limit does not make subsidies less accessible to those most in need.

“We have submitted proposals to raise the subsidised-home price ceiling, review interest rates and adjust financing to the Minister of Housing and Settlement Areas. We were asked to study them further with other developers’ associations,” Ari said.