Indonesian Property Market Slows Down in 2025
The Indonesian property market is facing tough times as housing prices continue to grow at a modest pace. According to the latest SHPR BI report for the third quarter of 2025, the growth in residential property prices has slowed to 0.71% for small houses and 1.18% for medium houses, lower than last year’s figures. Meanwhile, growth for large houses has increased to 0.72%, slightly higher compared to the second quarter of 2025. This shift in market dynamics reflects a general trend towards slowing, especially evident in Indonesia’s major cities. For instance, Surabaya recorded a decline in growth of 0.02% compared to the previous year. However, some cities like Pontianak and Yogyakarta have shown price increases, indicating regional variations in price dynamics. Overall, the market slowdown is linked to declining sales, particularly in the large house segment, which saw a 23% drop year-on-year. Contributing factors to the slowdown include changes in the affordability of home loans, with growth rates down to 7.39% in the third quarter of 2025. Although mortgage rates rose to 7.45% annually, it still didn’t give the market a significant boost. Consequently, housing demand remains relatively constrained, with developers heavily reliant on internal funds to finance new projects. Under such conditions, domestic economic and regulatory factors may play a critical role in restoring market growth rates in the future.
