The Primary Residential Property Price Index in Bali in Q2/2018 was recorded at 185.44, higher than the previous quarter's 185.23, according to a recent report published in Republika.

The report indicates this increase applies mainly to small house types, "while medium and large houses have still not shown a significant increase," said Deputy Head of KPwBI Bali, Azka Subhan who suggested small house prices grew 0.04 per cent Year-on-Year (YoY), while medium-sized houses only managed 0.01 per cent growth YoY.

Acceleration has also been recorded in the secondary residential property market. Neil Power owner of Xclusive Property is certainly seeing this trend. "We have noticed an increase in domestic buyer interest in Q2 especially for those properties priced under IDR 5 billion. Interestingly though, this is also a very competitive price range for foreign buyers too."   

Republika report this optimism in Bali's property market is largely being driven by improving economic conditions as well as the implementation of the relaxation of Bank Indonesia's loan to value (LTV) policy.

Azka said the loosening of the LTV policy, which began in August 2018, is believed to have stimulated the growth of mortgages and under the current conditions Bali's property sector is expected to improve further.

Terje Nilsen, Principal at Harcourts Seven Stones agrees. "The new LTV policy is great for business," he says "and it's attracting more local property investors back to Bali. In recent years Banks have been asking for an incrementally increasing deposit if someone were buying their second, third or more home. But now it's fixed at 15% regardless of how many properties they buy. This is much more attractive for those who want to invest in multiple properties or apartments and it's an ideal scenario for domestic investors."

Bank lending for home ownership or mortgages, apartments and shop houses from May to June grew by 6.12 per cent YoY and 6.64 per cent YoY respectively.

"The loan portfolio was nominal at IDR 9.70 billion in May and IDR 9.75 billion in June," Azka said.

Source: Republika, Kumparan

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