US Dollar Breaches Rp17,500 as Fuel Prices Rise: Beware of Exploding House Prices in Indonesia
Pressure on the property market is expected to intensify amid weakening consumer purchasing power and global volatility. The surge in energy prices and the rupiah’s depreciation, which today has even breached the Rp17,500 per US dollar level, are seen as factors that will trigger house price adjustments.
“It is certain, that cannot be avoided. Indeed, it cannot be denied that prices will adjust. We also will not close ourselves off to the fact that prices will rise,” said Senior Director of Strategic Consulting at JLL Indonesia, Milda Abidin, at the Indonesia Stock Exchange (BEI) building on Tuesday (12/5/2026).
In the midst of this situation, developers are reportedly beginning to seek various strategies to ensure that property price increases do not exceed the public’s affordability. One of them is by increasing the use of local materials in residential project construction.
The domestic content level (TKDN) factor becomes one of the important aspects to keep construction cost surges from being too aggressive.
“Local TKDN usually has to be higher. This is hoped to keep prices stable so that the increases are not significant to the point of affecting affordability,” she stated.
In addition to pressing material costs, developers are also starting to change project development strategies. Development of central business district (CBD) townships is now more filled with vertical housing projects because they are considered more cost-efficient.
“If the products are in their CBDs, they usually build more towards high-rise residential or vertical. With vertical, at least the costs can be spread evenly across all developments there,” said Milda.
Nevertheless, she could not yet confirm how much the house price increases will be in the future. However, it is likely not to be as large as the surge in construction raw material prices.
“We use the old benchmark, when iron or steel rose 30-40%, the impact on property was not up to 15% increase in total cost. So, it can be estimated how much the increase will be,” she said.