The latest Bank Indonesia (BI) Residential Property Price Survey reveals a significant contraction in home sales during the first quarter of 2026. This downturn in the nation’s housing market is attributed to various inhibitors impacting both development and sales, most notably a surge in building material prices and elevated Home Ownership Loan (KPR) interest rates.
Residential property sales experienced a sharp decline of 25.67 percent year-on-year (yoy) in the first three months of 2026. This substantial contraction marks a notable reversal, following a period of positive growth when sales had expanded by 7.83 percent (yoy) in the fourth quarter of 2025.
According to the BI survey release on Saturday, May 9, 2026, while “sales of medium-type residential property units saw an increase, the performance for small and large-type residential property units remained subdued.” This indicates a divergent trend across different segments of the primary housing market.
The overall slump in home sales was largely influenced by the pronounced contraction in small-type home sales, which plummeted by 45.59 percent. This represents a drastic shift from the robust 17.32 percent growth recorded for this segment in the fourth quarter of 2025. Similarly, sales of large-type homes also experienced a contraction, dropping by 8.03 percent, although this decline was less severe than the 10.95 percent fall observed in the preceding quarter.
In stark contrast to these declining segments, the sales of medium-type homes demonstrated resilience, registering a growth of 8.28 percent. This positive performance is particularly noteworthy, surpassing the 4.84 percent decrease recorded in the previous quarter, highlighting a potential shift in buyer preferences or market stability within this specific category.
Beyond the immediate sales figures, the primary residential property market continues to grapple with fundamental challenges for developers. The BI survey identifies several key obstacles, including escalating building material prices, which contributed a significant 20.97 percent to the overall sales decline. Furthermore, persistent issues like licensing and bureaucratic complexities, high KPR interest rates, substantial down payment requirements for KPR applications, and various taxation problems collectively hinder market expansion and sales momentum.
Concurrently with the sales contraction, residential property prices in the primary market also experienced limited growth in Q1 2026. This trend is reflected in the Residential Property Price Index (IHPR), which posted a modest growth of 0.62 percent. This figure is slightly lower than the 0.83 percent growth recorded in the fourth quarter of 2025, signaling a slowdown in price appreciation.
From a financing perspective, the survey highlights that property developers predominantly rely on internal funds for residential property construction, accounting for a substantial 80.66 percent of their total financing needs. On the consumer side, Kredit Pemilikan Rumah (KPR) remains the preferred method for home purchases in the primary market, facilitating 69.87 percent of all acquisition schemes, underscoring its critical role in enabling homeownership.
Summary
The Bank Indonesia Residential Property Price Survey revealed a significant 25.67% year-on-year contraction in housing sales during Q1 2026, marking a notable reversal from prior growth. This downturn was primarily driven by a sharp 45.59% decline in small-type home sales, alongside an 8.03% contraction in large-type units. Key inhibitors include surging building material prices and elevated Home Ownership Loan (KPR) interest rates.
Conversely, medium-type residential property sales demonstrated resilience, growing by 8.28% in the same quarter. Developers continue to face challenges such as escalating building material costs, bureaucratic complexities, and high KPR interest rates, hindering market expansion. Concurrently, residential property price growth slowed to 0.62%, with KPR remaining the dominant financing method for consumers, while developers largely relied on internal funds.