Observer Suggests Government Issue These 2 Policies To Overcome Housing Backlog

Illustration (Photo: Doc. ANTARA)

JAKARTA - Director of the Institute for Democracy and Potential Studies (Ideas) Yusuf Wibisono said that the biggest challenge in the people's housing sector was the large number of backlogs.

Most of the people, around 82 percent, are already categorized as owning their own homes. Only about 18 percent of Indonesian families are categorized as not owning a house.

Yusuf said that with the number of households of around 67 million, 18 percent of families who do not own this house are equivalent to around 12.7 million households.

"This is the backlog number. To reduce the backlog number, the government provides housing interest subsidies (SBK) and housing down payment subsidies (SBUM)," he explained to VOI, Tuesday, June 4.

According to Yusuf, the Backlog of 12.7 million housing units came mostly from the lowest class, with very low purchasing power.

In addition, Yusuf continued, with a simple and frequent housing ownership financing scheme, the lower group will always be difficult and unable to own a house.

Finally, in the 2024 State Budget, the government allocated a housing SBK of IDR 4.6 trillion and a housing SBUM of IDR 0.9 trillion.

"If we want to remove the 12.7 million backlog by 2045, with an additional house demand of around 750,000 units per year, we need a people's home supply of at least 1.3 million units per year to achieve zero backlog by 2045," he said.

Yusuf explained that the current supply of people's homes is only in the range of 250,000 units per year.

Therefore, it requires a number of fundamental changes for the construction of this people's housing.

According to Yusuf, several fundamental policies for accelerating the construction of 1 million people's houses this year, which are crucial to at least 2 main things.

First, the return of the Ministry of Public Housing. Since the merger of the Ministry of Public Works and the Ministry of Public Housing, the development of public housing has tended to be neglected, less than the roar of infrastructure development in the era of President Jokowi.

The budget allocation for the construction of public housing is always minimalist.

Yusuf said, with a strong affirmative policy, the allocation of the housing SBK budget and housing SBUM could be increased through budget reallocation.

"For example, the subsidy of electric vehicles which are fake solutions for the energy transition should be removed and the budget of IDR 7 trillion will make the allocation of housing SBK and housing SBUM soar to double the current allocation," he said.

The second policy is that the government must seriously encourage banking efficiency and reduce national banking mortgage interest rates which are still very high.

The mortgage interest rate is currently still very high compared to other countries.

Yusuf said that this very expensive and high-risk home loan is one of the main causes of the high number of backlogs.

This is crucial for the government and also OJK to direct banks to reduce their level of profit and continue to lower mortgage interest rates and make them more flat.

"If the mortgage interest rate in Singapore is only around 3 percent, in Malaysia 5 percent, in Thailand 6 percent, then in Indonesia it is in the range of 10 percent. With high mortgage interest rates and generally floating, mortgage borrowers other than being burdened with very expensive costs are also at high risk if there is an increase in interest rates in the future," he said.