Edition 7: Gen Z May Not Be Able to Afford Houses?
Gen Z May Not Be Able to Afford Houses?
Source: Breno Assis/Unsplash
Finance Minister Sri Mulyani said that the younger generation now has lower purchasing power due to wages not keeping up with rising property prices, leading to many not being able to afford housing.
The current Property Price to Income ratio of houses in Jakarta is 23.04. This means that house prices in Indonesia are almost 23 times what the median household earns.
This is significantly higher than cities renowned to have high costs of living, such as Los Angeles (6.43), San Francisco (7.12), and New York (9.94).
The minister added that the average mortgage term for buying a house is 15 years. With Indonesia’s inflation at record highs and central banks around the world planning to fight inflation by hiking interest rates, people will find it more difficult to buy a house.
These trends are likely to worsen as data from Bank Indonesia said that property prices are at an all time high, and they have been steadily increasing for years.
The housing market is only one of many challenges Gen-Z will face in the coming years, with the current tech layoffs, increasing energy costs, and rising inflation.
The Government may also have reasons to be concerned as a lack of affordable housing has been shown to affect the economy, criminal activity, racial inequality, and political polarization.
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What Is Up, Indonesia?
🌎 Politics & International Relations
Final draft revision to Criminal Code (RKUHP) submitted to DPR: Last Wednesday, the Law and Human Rights Ministry released a final version of the government’s draft revision of the Criminal Code. The draft controversially retains articles thought to be problematic, with there being only minor modifications to wording.
Russian Foreign Minister Sergey Lavrov walks out at Bali G20 Summit: Russian Foreign Affairs Minister Sergey Lavrov walked out of the G20 Foreign Ministers’ Summit in Bali as he was met with criticism from his Western counterparts on the ongoing conflict in Ukraine.
📈 Economics & Business
Indonesia to export chickens to Singapore: After Malaysia’s halting of chicken exports led to shortages in Singapore, Indonesia’s Ministry of Agriculture stated that Indonesian companies will begin to export chicken products soon to Singapore.
China agrees to invest $3b in Indonesia sovereign wealth fund: China’s Silk Road Fund has agreed to invest up to 20 billion yuan in Indonesia’s sovereign wealth fund, especially in projects that promote economic connectivity between the countries. Check out WIUI’s post on Indonesia’s sovereign wealth fund here!
Russia and Indonesia inks deal on a $22b refinery in East Java and railway in new capital : Indonesian state-owned oil company Pertamina and Russia's Rosneft Oil Company are going ahead with their project to build a refinery in East Java and a new railway in Borneo.
🏛️ Society & Culture
Humanitarian group ACT accused of embezzling public funds: The government has frozen more than 50 bank accounts belonging to the Humanitarian Group ACT after a report from Tempo Magazine uncovered a scheme to siphon billions of aid money.
🌳 Science, Environment & Health
Indonesia pushes for Covid-19 boosters with cases at two-month high: In order to manage rising case numbers, the government is requiring people to provide evidence of Covid-19 boosters to enter most public areas in Indonesia.
PPKM Level 2 canceled in Greater Jakarta as Covid-19 case rate drops: PPKM (Covid-19 mobility restrictions) were downgraded right after it was raised from Level 1 to Level 2, as infection and hospitalization rates were decreasing.
What We're Reading
Here’s a piece that goes deeper on our article in last week’s newsletter on Jokowi’s visit to Russia and Ukraine.
Jokowi’s visits to Russia and Ukraine are more about domestic gains than the global interest “ “Since the beginning of Jokowi’s diplomatic mission, many experts have expressed doubts in Indonesia’s capability to be a peace broker and stop Putin’s invasion. It seems that Jokowi only pragmatically uses his visits to serve his own interest and gain domestic attention.”- Radityo Dharmaputra (Airlangga University), The Conversation
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