Indonesia Property Watch (IPW) CEO Ali Tranghanda asked Bank Indonesia to issue a more progressive regulation on Loan to Value (LTV) in order to tackle issues with a slowdown in the national housing market recovery.
“For the middle-lower segment, particularly houses with loan liquidity facility (FLPP), the LTV can be fully provided so that the down payment is set to 0 percent,” Ali said in a press release on Friday, May 6, 2016.
For the middle segment, Ali suggested that the LTV should be set to 90 percent, so that the down payment would stand at 10 percent. Meanwhile, Ali said that BI should strictly govern the LTV for upper segments, “because the upper segment is a subject to massive speculations, although it has impacts on the housing market,” Ali added.
According to Ali, policies that can hamper the cash flow of middle-lower segments includes the requirement for developers to market homes that are under construction.
“BI is expected to stimulate the housing market movement,” Ali added.
Ali explained that the relaxed policy could be implemented until the housing market fully recovered. Given with the current market condition, Ali said that BI should not burden the housing sector with strict regulations.
The national housing market has so far not shown signs of recovery. After a growth in sales figure in the fourth quarter 2015, the trend did not continue in the first quarter of this year. The IPW reported that the housing market in the first quarter plummeted by 23.1 percent compared to the previous quarter, or was down by 54.09 percent compared to the first quarter of last year.
Data from the IPW revealed that almost all regions experienced a decline in sales, and the middle segment remained the largest market share at 52.19 percent. Meanwhile, the upper and lower segments accounted for 28.27 percent and 19.54 percent of the housing market share, respectively. Earlier in the fourth quarter 2015, the upper segment dominated the market share.