Source: Kontan.co.id | July 22, 2024

The prospects for the property market in the second half of 2024 are predicted to be sluggish. This follows the end of the 100% Government Borne Value Added Tax (VAT) (DTP) incentive.

After the 100% subsidy period, from July to December 2024, the DTP VAT amount will be 50%.  The end of the 100% DTP VAT incentive will affect the demand trend for Home Ownership Credit (KPR), especially home purchases priced at IDR 2 billion to IDR 5 billion.

Deputy General Chair of the Indonesian Real Estate DPP (REI), Bambang Ekajaya, said that the end of the DTP VAT incentive would have an impact on the property market, especially the residential segment in the IDR 2 billion-IDR 5 billion price range. 

“VAT DPT really helps increase sales of middle to upper class houses and apartments, especially those with ready stock,” said Bambang to KONTAN, Sunday (21/7).

Not only will it affect sales, the end of incentives will also trigger an increase in house selling prices. “Moreover, next year there will be an increase in VAT from 11% to 12%,” he said.

That is why, Bambang hopes that the new government can make the DTP VAT policy a permanent regulation. He also hopes that this incentive will also apply to the MBT (Responsible Income Communities) class.

The DTP VAT incentive has actually been extended several times since it first came into effect in March 2023. Many property issuers have tried this incentive.

One of them is PT Ciputra Development Tbk (CTRA). CTRA Director Harun Hajadi said that VAT DPT has a significant impact on company performance. Incidentally, CTRA has quite a lot of residential stock in the price range of IDR 2 billion-IDR 5 billion, so it can take maximum advantage of this incentive.

“In the last six months, VAT DTP contributed 60% to total sales,” said Harun, Sunday (21/7).

Even though the 100% DTP VAT incentive has ended, Harun is optimistic that the marketing sales target of IDR 11.1 trillion this year can be achieved.

Director of PT Metropolitan Land Tbk (MTLA) Olivia Surodjo is also optimistic that sales will be maintained in the second half. It is believed that consumers will still take advantage of the 50% VAT DTP which is currently still in effect.

“Because if this program ends, consumers will return to paying their VAT obligations,” said Olivia to KONTAN, Sunday (21/7).

Director of Capital and Investment Management at PT Intiland Development Tbk Archied Noto Pradono also hopes that sales will remain stable until the end of the year. “We also hope that incentives will continue because purchasing power is still weak,” he said yesterday.

For three dollars, PT Pantai Indah Kapuk Dua Tbk (PANI) is also optimistic that it can achieve this year’s target. Christy Grassela, Corporate Secretary of PANI said that the marketing sales target that must be achieved in the second semester is still 40% remaining.

“In the first semester we reached 60% of the target,” he said yesterday.

PANI targets marketing sales of IDR 5.5 trillion in 2024. This target grows 158% compared to 2023 of IDR 2.1 trillion.

Senior Investment Information Mirae Aset Sekuritas Indonesia, Nafan Aji Gusta, said that with the end of VAT DTP, opportunities for property issuers depend on Bank Indonesia (BI) policy. “Waiting for BI to determine monetary policy easing,” said Nafan, Sunday (21/7). If you hope for interest rates to fall, it will still take a long time considering that BI’s benchmark interest rate is waiting for the Fed’s decision to reduce interest rates, which is expected to be in the final quarter of 2024.