Acquiring housing in Indonesia has become easier thanks to the support of the central bank, which is contributing to economic growth.

The Bank of Indonesia will introduce this relief in June 2015 in an attempt to join the government's fight against slowing economic growth. Since 2011, Indonesia - the largest economy in Southeast Asia - has been suffering from a slowdown in economic growth, reaching a five-year low of 4.71 percent (year-on-year) in the first quarter of 2015.

The perspective of the prudential monetary policy of the central bank

is one of the reasons for the slowdown in economic activity in Indonesia. As a result, key interest rates (the BI rate) remain relatively high at 7.50 percent, which restrains domestic consumption and business expansion. However, Bank Indonesia refrains from lowering its BI rate due to inflationary pressures, a large current account deficit, and increasing capital outflows ahead of further tightening of monetary policy in the United States (rising U.S. interest rates). Instead, the central bank has decided to ease lending requirements in an attempt to stimulate growth in lending and economic activity.

Indonesian banks

The banks that will be allowed to sell mortgages to first-time buyers with a 20 percent down payment are those with a non-performing loan ratio of less than five percent, in order to ensure the quality of the loans.

For most Indonesian banks, especially large (listed) banks, this is not an issue, as their NPL ratios typically range from 0.5 percent to 2.5 percent.

Martovardodjo

I added that different requirements will be imposed on buyers of second and third homes. Currently, the mortgage collateral ratio for buyers of second homes is 60 percent, and for third (and more) homes, it is 50 percent.

According to the latest data from the Bank of Indonesia

In Indonesia, residential property prices increased by 1.4 percent (quarter-on-quarter) in the first quarter of 2015 (compared to a growth rate of 1.5 percent quarter-on-quarter in the previous quarter). Data from the central bank also shows that lending growth in Indonesia has significantly slowed down. In March 2015, credit expansion slowed to 11.3 percent (year-on-year), compared to 12.2 percent in the previous month, and is significantly below the Bank of Indonesia's target for 2015, which was between 15 and 17 percent.

Bank Indonesia will expand the deposit requirement.

Regarding the loan-to-deposit ratio of local banks, starting from June 2015 (bank securities will be included). Currently, the central bank requires local banks to maintain loan-to-deposit ratios in the range of 78 to 92 percent.

For foreigners

Property ownership in Indonesia remains problematic, although it is expected that President Joko Widodo will allow foreigners to purchase luxury apartments in major Indonesian cities starting in 2018.