TEMPO.CO, Jakarta – The Indonesia Property Watch is asking Bank Indonesia (BI) to set a loan-to-value (LTV) policy that is more progressive. Such a policy is considered necessary to address the sluggish national housing market that has yet to show significant signs of recovery.
"Perhaps for the lower-middle class segment—especially for the FLPP credit program—the LTV could be raised to 100 percent so that the down payment becomes 0 percent," kata Indonesia Property Watch's CEO Ali Tranghanda said in a written statement, Friday, May 6.
The FLPP credit is a subsidized KPR (mortgage) program by the Ministry of Public Works and Public Housing designated for people with low income. The program offers a house purchase down-payment of Rp4 million per house and a loan interest subsidy of five percent per year for 15-20 years.
For the middle class segment, Ali suggests a LTV rate of 90 percent so that the down payment becomes 10 percent. For the high class segment, he welcomes a tighter policy to curb speculations.
Ali said there are policies that slow down the cash flows of lower-middle class developers. One of them is the mandate that developers must sell houses that are already built. "BI is expected to become a stimulus that drives the housing market," he said.
He added that a relaxation over the policy can be implemented until the housing market recovers. With the current market situation, he said, BI should not put more pressure to the sector by implementing tough regulations.
In the fourth quarter of 2015, the Indonesian housing market posted a sales growth. But in the first quarter of 2016 however, the sales figure dropped 23.1 percent from the previous quarter, and down 54.09 percent compared to 2015's first quarter.
ANGELINA ANJAR SAWITRI
