Steady! Property Sector VAT Incentive Boosts Home Sales By 323 Percent

Illustration of housing. (Photo: Special)

JAKARTA - CEO of Indonesia Property Watch (IPW) Ali Tranghanda said the housing sector incentives released by the government through the elimination of Value Added Tax (VAT) for dwellings below Rp2 billion and vat reductions for dwellings of Rp2 billion to Rp5 billion had a significant impact on sales increases.

According to him, although it only applies to ready-to-live housing or ready stock, but at least this policy can provide hope and fresh wind for the movement of the housing market in the country.

"Interestingly, there was a 323.5 percent increase in ready stock home sales on a quarterly basis," he said in a written statement as quoted on Monday, April 12.

Ali added that the stimulus contained in Regulation of the Minister of Finance (PMK) Number 21/PMK/010/2021 and coming into force on March 1 is like a fresh wind in the midst of the sluggish property market during the pandemic as it is today.

"There has never been this much stimulus provided by the government, not only the reduction of VAT, but the relaxation of LTV (loan to value) to low interest rates. Not to mention the quotas for housing for low-income people that were added this year, obviously we have to appreciate," he said.

However, as previously thought, this increase is still limited to ready stock homes so the indent house market is slightly restrained.

He noted, based on a housing market survey conducted by IPW, it is estimated that the housing market in Banten experienced positive growth in the first quarter of 2021 of 7.5 percent. Meanwhile, the increase in home stock sales jumped by 323.5 percent.

"This increase makes the contribution of ready stock houses to reach 14.6 percent of the total units sold. The sale of ready stock is mostly certain to occur due to the reduction in VAT that increases consumer demand to buy a home," he explained.

In fact, he continued, most of these ready stock sales are in the price segment below Rp 1 billion.  Whereas when viewed only from the sale of indent houses (not ready stock) then sales decreased 4.7 percent.

For information, in the second quarter there is expected to be an even higher increase for the sale of ready stock homes by seeing that more and more people are starting to know the relaxation, following currently still 65 percent more than consumers who are not aware of the VAT reduction policy.

In the future Ali hopes that the government can provide a relaxation of VAT reduction for the sale of indent housing, so that it can contribute significantly to the national economy.

"As known multiplier effect property sector including housing is very large as a locomotive of the national economy and encourage 174 other follow-up industries," he concluded.