Why Do Land Prices Keep Rising?

JAKARTA, KOMPAS.com - Land prices in Indonesia tend to rise continuously from year to year. In some areas, the increases can be very significant in a short time. Even Deputy Chairman of the Central Board of the Indonesian Real Estate Association (Waketum DPP REI) Bambang Ekajaya once stated that the characteristic of land, which is limited in quantity, is one of the main reasons why this asset is highly sought after by investors. “Land is God’s creation, there is no factory for it, and its quantity is limited. Therefore, its price always rises every year,” Bambang said, quoted by Kompas.com on Friday (6/3/2026). The average price of such land was Rp 12,652,597 per square metre in the second semester of 2024. Then, in the second semester of 2025, land prices in Jabodetabek were at the level of Rp 12,746,152 per square metre. This phenomenon often raises the question: what exactly makes land prices keep rising? 1. Population Growth and Housing Needs As the population increases, the need for housing rises. The available land remains the same, while demand continues to grow. A simple economic law applies: demand rises, prices follow. This is the main reason why land prices almost never fall in the long term. The construction of toll roads, airports, stations, and public transport such as high-speed trains greatly affects land prices. When an area becomes more accessible, the value of land around it immediately surges. For example: land near toll roads, stations, or city centres. The migration of people from villages to cities (urbanisation) makes cities increasingly dense. As a result, land in city centres becomes even more limited, causing land prices to soar dramatically, and peripheral areas are also pushed upwards.