A World Bank research titled “Time To Act 2019” reported that Jakarta is in the ranks of the most expensive residential cities in the world. House prices in Jakarta are even higher than in other cities in developed countries, such as New York, London, and Singapore.
According to an article by the Jakarta Property Institute, this is seen from the population’s ratio of house prices per income (price to income ratio). The ratio in Jakarta is 10.3, while the ratio in London is 8.5; New York 5.7; and Singapore 4.8.
The Executive Director of the Jakarta Property Institute, Wendy Haryanto, said that the high house prices in Jakarta are due to complicated bureaucratic costs. Wendy explained that this bureaucratic cost includes the licensing process, such as a building permit (IMB) and a low level of ease of doing business.
“This high bureaucratic cost causes house prices to be costly and continue to rise,” Wendy said in a virtual conference, as quoted from Kompas.com, Friday, July 10, 2020.
In addition to these reasons, Kompas.com also summarized the causes of high house prices in Jakarta based on the Jakarta Property Institute article that developers have difficulty fulfilling the obligation to build cheap flats due to the lack of land availability. As a result, there is a buildup of developer debt to build flats, affecting the length of time to get a certificate of function worthiness (SLF) for the building. This resulted in delayed building operations.
Besides Jakarta, based on an article by KONTAN.CO.ID, cities with high house prices, when calculated from the ratio of house price to income calculations, are Bandung and Denpasar.