Is it true that rising inflation threatens property prices?

Is it true that rising inflation threatens property prices?

Is Rising Inflation Threatening Property Prices? The alarming rise in inflation in many countries is currently occurring due to global uncertainty. The United States has the highest inflation situation in the last four decades at 8.5 percent.

In Indonesia itself, inflation was recorded at 4.94, which is relatively better when compared to other countries. This global inflation occurs because supply interruption caused by the pandemic, the conflict between Russia and Ukraine, as well as an increase in monetary policy in developed countries. Global inflation has the potential to increase by the end of 2022, although the trend could be declining.

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Negative impact of rising inflation

This rising inflation will surely have a negative impact on the national economy. What are the negative impacts? This inflation will cause a gradual increase in the price of basic goods and commodity prices.

Not to mention the government’s policy of increasing the price of fuel oil (BBM) which is considered likely to cause a spike in inflation and worsen the situation.

It is undeniable that the rise in inflation will also have an impact on the property sector. Having not fully recovered from the pandemic conditions in the previous two years, the property sector is now also under pressure due to high inflation.

Also read: 5 Reasons for profitable home investment

How does rising inflation affect the property sector?

The obvious effect of inflation on the property sector is indicated by the increase in the benchmark interest rate. Global economic uncertainty has pressured Bank Indonesia (BI) to increase the benchmark interest rate, which has now reached 3.75%.

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The increase in interest rates will affect the home purchase facility program, namely the Home Ownership Loan (KPR). With the increase in the reference interest rate, the interest rate of the loan will also increase so that the amount of payments that must be paid by the debtors participating in the mortgage will also be increased.

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The pressure due to rising inflation will also be felt by developers or developer property Para developer asked to be more innovative in offering their products.

For what? Because inflation causes an increase in the prices of land and various construction materials, which can also increase the sale prices of properties. This is believed to result in a decrease in the purchasing power of the property.

Therefore, developers must make adjustments to the material and area so that their products can still be reached by potential consumers.

Although it is expected to have a significant impact on the real estate market, this moment is considered the right time to buy property before inflation accelerates.

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