Property Sector: Has Fallen Down By A Ladder, Due To The Threat Of Recession And The 'Return' Of PSBB

Illustration. (Photo: Unsplash)

JAKARTA - The pandemic is still a major scourge that has severely affected the economy. Decreasing purchasing power occurs in all segments of society.

Indonesia is expected to enter a recession at the end of Q3 2020. Economic contraction of 5.32 percent has occurred in Q2 2020.

This downward trend is expected to continue in the next quarter which means that technically, Indonesia has entered a recession with negative growth for two consecutive quarters.

This recession wave will be very dangerous if it hits the banking sector. If the financial and banking sectors experience a crash, it means that we will be faced with a multi-dimensional recession in addition to the health crisis due to the pandemic.

This must be anticipated immediately because currently the restructuring of loans in banks has reached Rp. 857 trillion, most of which are in danger of default if there is no relaxation policy until the end of the year. With this series of worries, the property sector is faced with unfavorable conditions.

Based on a survey on the property market in Jabodebek-Banten in the second quarter of 2020 conducted by Indonesia Property Watch (IPW), it shows that the market experienced a tremendous increase, almost doubling compared to the first quarter of 2020. This movement was clearly seen at the end of May after Large-Scale Social Restrictions (PSBB) in a number of areas was relaxed.

The public euphoria who sees the property market as a safe investment instrument makes the market move up. Previously Ali Tranghanda, CEO of Indonesia Property Watch said that although this movement was encouraging, the pattern was still unstable and very vulnerable to government policies being taken in the face of the pandemic.

"Because it is known that the property market in the first quarter of 2020 fell by 50.1 percent when the PSBB was implemented. This means that the implementation of the PSBB will greatly affect the current property market," Ali said in a written statement to VOI, Thursday, September 10.

With the re-enactment of the PSBB in a number of areas including DKI Jakarta as of September 14, there are worries that the property market will experience another sharp contraction. The impact is expected to be visible in the fourth quarter of 2020.

If the tightening of the PSBB continues, until the end of 2020 the property market will be under severe pressure. The condition of the middle to small class developers is currently very depressed. As was previously estimated, the endurance of this developer is expected to be 3-6 months from March 2020.

"This means that next month if conditions are still not improving, natural selection will begin for developers. Those who cannot survive will certainly collapse. On the other hand, the consumer market will see current conditions by tightening cash flow and anticipating the worst possible soonest until the end of 2020. The impact will be to make the wait and see period longer, "said Ali.