Property News · February 23, 2016

Why Bank Indonesia cut interest rates for the real estate sector again


Bank rate cuts aim to boost property growth this year
Residential area in Indonesia (Photo by Rony Zakaria/Bloomberg News)
Indonesia’s residential market ended 2015 on a dull note, according to a new survey conducted by the country’s central bank, Bank Indonesia, triggering the reduction of benchmark rates for a second consecutive month in order to boost growth, reports The Jakarta Post.
Following the economic slowdown that resulted in a six-year low 4.79 percent year-on-year GDP growth in Indonesia, the country’s residential market only registered a quarterly increase of 0.73 percent in Q4 2015, down from an already low 0.99 percent in the previous period,
According to the Indonesia Investments, the trend is expected to continue until at least the first semester of 2016.
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Several stimulus packages that could have some positive impact on the real estate and construction sectors have already been released by the government since September, including curtailing red tape, implementing rate tax cuts for exporters, easing import taxes on capital good, and imposing tax incentives for investment in special economic zones.
The latest move is the cutting benchmark rates for the property sector by Bank Indonesia from 7.25 percent down to 7 percent.
In comparison, the benchmark interest rate in Malaysia is 3.25 percent and in Thailand is 1.50 percent, per Indonesia Investments.
Eddy Hussy, chairman of Real Estat Indonesia (REI), pointed out that Indonesian interest rates were too high next to its ASEAN neighbours and hinders competitiveness in the era of ASEAN Economic Community.
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“As the interest rate goes down, not only the property sector, but all business sectors will be revived,” Hussy told The Jakarta Post.
Currently the area with the lowest growth in residential real estate prices was in Pontianak in West Kalimantan. Meanwhile, Medan in North Sumatra, showed the opposite and reported the highest growth.
Despite the government unveiling a series of stimulus packages, the boost may not be felt until the second half of 2016, according to Eddy Ganefo, chairman of the Association of Housing and Settlement Development in Indonesia (APERSI).
Ganefo also welcomed the reduction of benchmark interest rate by Bank Indonesia to spur the slowing property sector.

Source : property-report.com
Read more…Why Bank Indonesia cut interest rates for the real estate sector again

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