After years of sluggish growth, Indonesia’s property industry is expected to rebound in 2026. Signs of economic recovery were already visible in late 2025, creating optimism for developers and policymakers alike. The momentum is seen as an opportunity to advance the government’s ambitious Three Million Houses program under President Prabowo Subianto and Vice President Gibran Rakabuming Raka.
Key Facts & Background
- Economic Recovery:
- National economic growth averaged only 4% between 2014–2024, weighed down by the COVID-19 pandemic.
- Growth improved in Q4 2025 to 5.45%, up from 5.04% in Q3 2025.
- Government projects 5.4% growth in 2026, while Bank Indonesia forecasts 5.1–5.6%.
- Property Growth Elasticity:
- Property growth typically 1.5–1.7 times economic growth.
- With GDP growth at 5.2%, property sector growth could reach 8–10%.
- Historical precedent: property boom between 2010–2012 after recovery in 2009.
- Government Policies:
- Extension of 100% VAT subsidy (PPN DTP) to support housing affordability.
- Plans to establish Badan Percepatan Pembangunan Perumahan Rakyat (BP3R) as a dedicated housing authority.
- BP3R expected to coordinate housing programs across ministries and execute policies efficiently.
- Housing Program:
- Government continues to push the Three Million Houses initiative for low- and middle-income households.
- Inspired by successful social housing models in Singapore (HDB) and Turkey (TOKI).
Strategic Insights
The anticipated rebound in Indonesia’s property sector reflects the close link between economic growth and housing demand. With GDP growth projected to rise above 5%, the property market is expected to expand at a faster pace, potentially reaching double-digit growth. This elasticity underscores the sector’s role as both a driver and beneficiary of broader economic recovery. The extension of fiscal incentives such as VAT subsidies provides immediate relief for buyers, while lower interest rates create a more favorable environment for developers and consumers.
Longer-term momentum will depend on institutional reforms, particularly the establishment of BP3R as a central authority for housing development. By consolidating responsibilities that were previously fragmented across ministries, the government aims to accelerate delivery of affordable housing and strengthen policy execution. If successful, Indonesia could replicate the social housing achievements seen in other countries, turning property recovery into a sustained boom. The combination of economic revival, supportive policies, and institutional innovation positions 2026 as a pivotal year for the housing industry and for the government’s broader agenda of inclusive growth.