Prisma Ardianto, Jakarta – Growth in bank lending to Indonesia's property sector slowed to its weakest level in more than four years in June, reflecting sluggish demand for housing and continued weakness in several property segments.

According to Bank Indonesia's data, property credit grew 4.24% year-on-year to Rp1,022.47 trillion ($57.57 billion) in June, according to Bank Indonesia data released Sunday. The pace was the slowest in 53 months, or nearly 4.5 years.

"Property lending has fluctuated significantly since the Covid-19 pandemic hit Indonesia in early 2020. Credit contracted by as much as 2.27% year-on-year in January 2022 before surging 21.52% in January 2023, partly due to a low base in the previous year," the central bank's spokesman Ramdan Denny Prakoso said.

Growth subsequently moderated, reaching 12.91% in March 2024 before continuing to slow through June 2026.

The slowdown was primarily driven by weaker lending for landed houses, which grew 4.63% year-on-year to Rp938.83 trillion. Lending for homes measuring up to 21 square meters contracted 8.04%.

Credit for apartments also declined, falling 0.53% to Rp38.05 trillion, while lending for shop houses and office houses dropped 0.99% to Rp45.58 trillion.

Rising credit risk

The slowdown in lending has also been accompanied by a deterioration in credit quality.

The non-performing loan ratio for property lending rose to 3.31% in June from 3.08% in December 2025 and 3.19% a year earlier.

Despite slower credit growth and rising risks, bank financing remains the dominant source of funding for Indonesians purchasing property. As of March 2026, mortgages accounted for 69.86% of property purchases, followed by installment cash payments at 19.61% and full cash payments at 10.53%.

The weaker lending growth comes as residential property prices remain subdued.

Bank Indonesia's Residential Property Price Survey showed that primary-market residential property prices rose 0.69% year-on-year in the second quarter, slightly accelerating from 0.62% in the first quarter.

The central bank said the increase was mainly supported by prices for large homes, whose price index rose 0.68% year-on-year, compared with 0.50% in the previous quarter.

Prices for small homes increased 0.49%, slowing from 0.61% in the first quarter, while prices for medium-sized homes remained relatively stable.

Property sales improve

Residential property sales also showed signs of improvement, although demand remained in contraction.

Primary-market residential sales fell 2.36% year-on-year in the second quarter, a significant improvement from the 25.67% contraction recorded in the first quarter.

The recovery was driven by stronger sales of small and large homes, while sales of medium-sized properties remained limited.

For developers, internal funds remained the dominant source of financing for residential construction, accounting for 73.28% of total funding requirements.

On the consumer side, mortgages remained the preferred method of purchasing new homes, accounting for 70.05% of transactions in the primary residential market.

Source: https://jakartaglobe.id/business/indonesia-property-credit-growth-slows-to-424-lowest-in-45-year