Introduction

The Indonesian property market

When searching for a property in Indonesia it is important that you take your time and examine all of your options closely. 

You should research the area in which you want to move and to compare prices with other properties on the market. Unfortunately for prospective property buyers in Indonesia, house prices have steadily rose despite the surrounding global financial crisis. Average house prices rose by 4.5% in 2011 and look set to continue to increase.

The main reasons for this increase are higher construction materials prices, an increase in workers wages and a higher permittance. However, it is difficult to understand why property prices continue to increase as being the fourth most populated country in the world with 245 million people, demand far outstrips supply. Indonesia is currently profiting from economic growth relatively high level of investment however some reasons for the hampered growth of Indonesia’s housing market could be due to the following:

Foreign ownership of land or property in Indonesia is also very difficult to obtain. Land titles (hak milik) can only be held by Indonesians and it is against the law for foreigners to own land. In regards to apartments, the 1996 regulation (No. 41/1996) states that foreigners who reside in Indonesia, or visit the country regularly for business purposes, can purchase a home, apartment or condominium as long as it isn't a part of a government-subsidized housing development.

Foreigners are able to purchase a house with consent of the landowner however you can only have a contract for 25 years with the possibility to extend it a further 25 years. Therefore it will be difficult to get around the laws of purchasing land or property whilst in Indonesia. However there are plans for a renewal or update of the process to compete with neighbouring Malaysia and Singapore that have a much more welcoming attitude towards foreigners seeking a property.


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