Indonesia’s Housing Market: Sales Decline, Prices Stagnate

Indonesia’s housing market faced a significant slowdown in 2026. Primary market sales dropped sharply, while price growth almost came to a standstill. Adjusted for inflation, property values declined, and developers limited new project launches, focusing instead on selling completed units, according to Global Property Guide.

Housing Price Trends in Indonesia

Throughout 2025, housing price growth in Indonesia gradually slowed. In the first quarter, property prices were 1.07% higher than a year earlier. Growth then declined to 0.90% in the second quarter, 0.84% in the third quarter, and 0.83% in the fourth quarter. Nominal growth did not reflect the real condition of the market. After adjusting for inflation, housing values had already declined by the end of the year: between October and December, real prices were 1.98% lower than a year earlier.

In the first quarter of 2026, Indonesia’s Residential Property Price Index (RPPI) stood at 110.60 points. According to Bank Indonesia, nominal price growth was only 0.62%, the weakest result in the history of the index. At the same time, inflation reached 3.93%, meaning that in real terms housing prices declined by 3.18% year-on-year. This was the largest real price drop since the first quarter of 2023.

Quarterly data also showed that the market had effectively stalled. Between January and March 2026, prices increased by just 0.04%. After adjusting for inflation, the quarterly figure turned negative, with prices declining by 0.89%.

The slowdown affected all major property segments. In the fourth quarter of 2025, medium-sized residential units remained the most resilient segment, with prices rising 1.12% year-on-year. Large properties increased by 0.72%, while small units rose by 0.76%. In early 2026, prices for medium-sized properties increased by 0.88% over 12 months, large properties by 0.50%, and small units by 0.61%.

The long-term trend shows that the market has largely lost its accumulated growth. Since 2018, the housing price index has increased by approximately 10.6%, while consumer prices have risen by around 20% over the same period. As a result, after adjusting for inflation, Indonesian property is now about 10% cheaper than eight years ago.

Housing Market in Indonesia’s Regions

Weak price dynamics were recorded across almost the entire country. The Bank Indonesia survey covered 18 major Indonesian cities. In the first quarter of 2026, annual price growth slowed in ten cities, while three cities recorded nominal declines. After adjusting for inflation, the picture was even weaker: none of the 18 urban markets recorded an increase in real housing prices.

In Banjarmasin, annual price growth slowed from 1.63% in the fourth quarter of 2025 to 0.52% in the first quarter of 2026. In Surabaya, prices declined by 0.04% year-on-year in the previous period and then fell by 0.27% in the first quarter of 2026. At the same time, several regional markets maintained positive momentum. In Padang, growth accelerated from 0.17% to 1.21%, while in Balikpapan it increased from 0.43% to 1.44%. Looking at quarterly changes, the largest declines were recorded in Pontianak and Yogyakarta, where prices dropped by 0.74% and 0.68%, respectively.

In real terms, after adjusting for inflation, the largest annual decline in housing values was recorded in Surabaya, where prices fell by 4.04%. It was followed by Manado (-3.94%), Pekanbaru (-3.81%), and Bandar Lampung (-3.77%).

Jakarta’s Apartment Market Remains Stable

Apartments in Jakarta have shown relatively stable dynamics compared with the broader Indonesian housing market. According to Colliers International, in the third quarter of 2025, the average price of strata-title residential units stood at around IDR 36 million per sq. m.

Over 12 months, prices increased by only 0.8%, while quarterly growth amounted to 0.2%. In early 2026, moderate demand helped keep prices broadly stable across most districts of the capital.

The most expensive apartments are located in Jakarta’s Central Business District, where the average price reaches IDR 53.4 million per sq. m. In South Jakarta, residential property averages IDR 40.7 million per sq. m., while in Central Jakarta the figure stands at IDR 36.7 million. More affordable options are available in East Jakarta, with average prices of around IDR 22 million per sq. m. (about $1,223), followed by North Jakarta at IDR 27.1 million and West Jakarta at IDR 28.4 million per sq. m.

For buyers focused on dollar-denominated investments, property in the capital has become cheaper due to the weakening of Indonesia’s national currency. In the third quarter of 2025, with an exchange rate of around IDR 16,800 per US dollar, the average apartment price in Jakarta was approximately $2,144 per sq. m. By the end of July 2026, when the exchange rate reached around IDR 17,900 per dollar, the same property was valued at about $2,010 per sq. m.

Colliers also highlights risks for the construction sector, warning that rising geopolitical tensions could push up the cost of building materials and further increase developers’ expenses.

Developers Reduce New Projects

According to Bank Indonesia, primary housing market transactions declined by 25.67% year-on-year in the first quarter of 2026 and by 7.69% compared with the previous quarter. Sales of small residential properties dropped by 45.59% annually and by 14.68% quarterly. Sales of medium-sized properties increased by 8.28% year-on-year but decreased by 10.72% compared with the previous quarter, while large properties recorded an annual decline of 8.03%.

The decline in demand has already affected developers’ strategies. In Jakarta, only 192 new strata-title apartment units were added in the first quarter of 2026, mainly from middle-market projects in the eastern part of the city. Total apartment supply in the Indonesian capital reached around 233,000 units, but annual growth remained below 3%. According to Colliers, the number of completed units in the first three months accounted for only about 10% of the approximately 2,000 apartments expected to be completed throughout 2026.

Around 60% of the expected new supply in 2026 will come from South Jakarta. However, developers remain cautious about launching new projects, as the market has yet to absorb a significant volume of apartments built in previous years. Companies are reducing new construction volumes and focusing on selling completed properties.

Factors Affecting Indonesia’s Housing Market

The growth of Indonesia’s housing market is being constrained by rising construction costs. This factor was cited by 20.97% of respondents in a Bank Indonesia survey. The second most significant issue was difficulty obtaining permits and bureaucratic procedures, mentioned by 18.15% of respondents. Another 16.47% pointed to high mortgage rates, which limit buyers’ purchasing capacity. Additional pressure comes from down payment requirements (12.16%) and taxation (11.28%).

To support demand, Indonesia extended the PPN DTP programme, under which the government covers value-added tax for housing purchases worth up to IDR 2 billion ($112,000). Buyers can also receive exemptions from certain payments, including the Land and Building Acquisition Duty (BPHTB) and building permit-related fees.

According to Colliers, these measures are already changing the structure of demand. Buyers are increasingly choosing completed apartments instead of properties under construction, as they prefer immediate occupancy and lower risks of project delays. Studio apartments and mid-range housing have become the most resilient segments, while demand for premium properties remains weak.

Conclusion

Analysts at International Investment note that Indonesia’s property market in 2026 has been affected by several simultaneous factors: slowing price growth, declining real property values, falling sales, and a more cautious approach from developers.

The country’s economic indicators remain relatively strong, but the housing sector is performing considerably weaker. GDP growth has not been enough to offset high borrowing costs, declining purchasing power, and changing buyer behaviour. Completed mid-range apartments and affordable housing supported by government programmes remain the most resilient segments. More expensive properties and early-stage development projects are facing significantly more challenging conditions.

In the near term, the market is likely to continue adjusting to the new environment. Developers will limit construction volumes, while the recovery of demand will depend on borrowing costs, currency stability, and buyer confidence. Indonesia’s housing market can no longer be considered a growth market; it is undergoing a deep correction after a period of rapid expansion in supply.