A New Home for Rp 70m? It Might Be Within Reach for Indonesia's Poor

Jakarta Globe, Anita Rachman, March 19, 2012

Model units of the prefab homes that the Ministry of Public Housing
 envisions as an affordable plan to homeownership. Accounting for all
the costs  associated with them, setting up the houses would cost at least
Rp 70 million, with mortgage plans available. (JG Photo/ Afriadi Hikmal)  

       

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Shortly after he was appointed public housing minister in October, Djan Faridz was given a daunting challenge: build Rp 25 million ($2,750) houses for low-ranking civil servants on land provided by the local government.

“I was shocked,” he told the Jakarta Globe in a recent interview. “How can I build a house with only Rp 25 million? And I wanted it to have at least a 36-square-meter [floor area].”

But he soon found an answer in Palembang, South Sumatra. In a trip to the province, he met representatives of Grand Wijaya Persada, a construction company that has been building houses for even less than that amount.

A model cheap house

Inside the ministry compound in South Jakarta, a fully furnished, two-bedroom 45-square-meter model unit now stands.

The basic structure of the prefab house costs Rp 35 million, sans flooring, ceiling and paint, which runs an additional Rp 5 million.

Beside it, a model unit of the Rp 25 million, 36-square-meter version is being built. Visible for now is the steel mold where concrete would be poured into to create the basic structure. But it won’t remain like that for long, because the house can be finished in as little as seven days.

Anyone interested in looking at the model units is welcome at the ministry. Both units have a defined two-bedroom floor plan according to the prefab mold patented by Umar Sumadi, the production head at Grand Wijaya. A single mold can be used to construct as many as 200 houses.

The ministry has already signed a memorandum of understanding with several other ministries committing to help provide civil servants with these cheap houses.

Djan said the project would be done in 60 districts and municipalities across the country, starting off with East Nusa Tenggara (NTT) and North Maluku.

The ministry is aiming to build around 7,900 cheap houses in NTT and 2,000 in North Maluku this year, among others.

Rp 70 million dream

The minister, however, is keen on finding a way to make the same cheap houses available to all Indonesians.

“Housing is a serious matter, after food and clothing. But many cannot afford it because it’s remarkably expensive,” Djan said.

According to his ministry’s data, as many as 4.8 million Indonesians today live in dilapidated houses, and more than 11 million people do not have their own homes. And with real estate prices expected to keep rising, chances are these figures will only climb higher.

That’s why the minister’s goal is to give Indonesians a chance to own a home for an affordable Rp 70 million.

Here’s how he sees it: in certain parts of Jakarta’s satellite cities, say Depok, people can still get a 60-square-meter plot of land for less than Rp 20 million.

If the Rp 25 million, 36-square-meter prefab model is built on that land, then for as little as Rp 70 million — including flooring, ceiling, paint, electricity and water installations and other fixtures — an Indonesian family can have a home it can call its own.

“Of course you can also get it elsewhere, anywhere you want,” the minister said. “So if you are outside Java, you can get a house for even less than Rp 70 million.”

Bringing it to the people

The idea is that the ministry will work with developers who can build subdivisions full of these prefab units.

For a housing project to be economically feasible, at least 200 units must be constructed to maximize the use of the mold. Grand Wijaya would earn a 5 percent licensing fee for each socialized housing project.

Indonesians can then buy the houses from these developers at prices determined together with the ministry. Of course, certain conditions, such as that the potential buyer does not own a house yet, have to be met.

The ministry will then help get bank housing loans. For a Rp 70 million house, Djan said the current computation would see a buyer pay Rp 575,000 a month for 15 years.

But it might still be a while before these become a reality, as the ministry hasn’t begun discussions with developers yet.

Real Estate Indonesia chair Setyo Maharso said delivering low-cost homes was not a problem, and the ministry’s plan could be executed in the same way as previous programs.

Doing it in Jakarta, though, would not be easy, he said.

“It’s even quite difficult to build it in Depok. Bogor or Bekasi are still possible, but not here in Jakarta,” he said.

Although he completely supports the policy, he said prefab units were not always ideal.

“Low-income families usually buy a small house, but when they have money, they will build more rooms. But prefab houses are not really flexible for modifications,” he said.

Priyo Suprobo, a structural engineer with the Sepuluh November Institute of Technology (ITS), agreed. He said modifying a prefab structure would be difficult, and that the lack of flexibility was a major weakness.

Another is that people could not embed electrical wiring into the walls.

But Priyo still believes this kind of model can help low-income families solve their housing problems, “especially if the ministry provides a subsidy,” he said.

Will people buy?

Ridwan, a security guard in an office building in Kuningan, currently rents a house in Kedoya in Kebun Jeruk, West Jakarta, with his wife and child for Rp 350,000.

Hearing about the Rp 70 million house made him happy and hopeful. “I think it’s affordable, and 36 square meters looks decent enough,” he said.

On the other hand, Afrizal, a single 24-year-old noddle seller in Lenteng Agung, felt the Rp 575,000 amortization per month was still out of reach.

“It’s already hard to make ends meet,” he said.

Related Article:

Indonesian Dangdut King to Promote Cheap Government Housing