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Rising home prices in Indonesia are leading younger generations, particularly Gen-Z, to rent rather than buy homes. A survey by Inventure revealed that two-thirds of Gen-Z don't expect to buy a home in the next three years, citing high prices, unstable jobs, low wages, and financial insecurity. Many also face challenges qualifying for mortgages. Real-estate tech company Rukita observed a decline in homeownership, attributing it to rising prices and stagnant incomes. Despite this, builders still target Gen-Z as future buyers. The demand for rentals surged by 55% in early 2024, influenced by high interest rates and financial instability.
Amid rising home prices, younger generations in Indonesia are leaning towards renting homes, over purchasing them. Based on data from various reports, Gen-Z (those born between 1997 - 2012), are renting their residences as opposed to becoming homebuyers. Advertisement
A survey from Inventure, a financial service provider, highlighted that around two-thirds of the Gen-Z population in Indonesia do not believe they will be able to buy a home within the next three years. They attributed high prices as the chief factor, with unstable employment, low wages, and desire to spend on experiences such as concerts and holidays as other reasons.
Some others also cited significant challenges in qualifying for a mortgage, and existing debts that prevented them from securing home loans. The survey also marked that 38% among their respondents opted for rent-to-own arrangements, and 34% opted for short-term lease agreements.
This trend is in line with the previous year, where a report from Jakpat showed that 36% of the Gen-Z surveyed were hesitant to purchase a property. Among the 36% of the surveyed, some believed that renting was more economical, others rented for better location, while the majority preferred to rent due to financial instability.
Rukita, a real-estate technology company, noted a drop in homeownership among younger generations, attributing it to the faster rise in home prices compared to the slower growth of median incomes. Serving approximately 50,000 people annually, the company's tenant base primarily consists of individuals under the age of 27. Rukita currently manages around 1,300 properties across 21 cities in Indonesia.
Regardless of these statistics, builders and developers continue to target Gen-Z as prospective buyers, believing that they are keen on becoming future homeowners in spite of their current financial instability. Renting is also an effective option for those wishing to forgo long commutes from the outskirts of Jakarta, the country's capital, to work places in the city. The Pinhome Home Value Index (PHVI) and the Pinhome Home Rental Index (PHRI) have shown that more people are choosing to rent rather than buy homes. In the first quarter of this year, the demand for home rentals increased by 55% compared to the average demand for rentals in 2023.
In conclusion, the report also listed high interest rates and financial insecurity as contributing factors to this decline in home ownership.
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