Since high school, 27-year-old Leonardo Juan has been accustomed to living nomadically, moving from room to room in various cities. The experience eroded the emotional attachment to the concept of a private home.

For Juan, shelter is a function, not a status symbol. As long as the roof is safe and the cost is reasonable, the form of ownership is negotiable.

When the Covid-19 pandemic occurred, the situation further strengthened Juan's view. The family's income dropped dramatically, forcing his parents to sell the house to keep the kitchen burning. "We survived without the asset of a house for two years, it turned out to be safe," he said.

It convinced him that financial security is more important now than having a permanent home. As a creative worker, Juan is able to work remotely. He now shares a room with his sister in Bandung. It's all in a bid to reduce his sister's boarding costs.

When it comes to the future of owning his own home, he often compares his salary with property prices on the outskirts of Jakarta. A subsidized house in Bekasi City or Bogor City now exceeds Rp160 million, while the installments still have to be paid for two decades.

A subsidized house in Bekasi City or Bogor City now exceeds Rp160 million, while the installments still have to be paid for two decades.

The ratio of income to house prices for him is far beyond the starting line. He concluded that pursuing home ownership would sacrifice other more pressing needs, especially for a sandwich generation like himself.

The next obstacle to home ownership is the location of the house itself. Affordable subsidized housing projects are often two hours to three hours away from office centers. Juan has his office in the Sudirman area of Jakarta. If he lived in Bogor or Bekasi, his time would be spent on the road. "Being old on the road is also a loss," he said.

He admitted that he had heard a glimpse of the Housing Financing Liquidity Facility (FLPP) incentive scheme, Zero Percent Down Payment (DP) via BPJS Ketenagakerjaan, and VAT tax borne by the government. The information appeared on social media and office chat groups, then disappeared. Until now, Juan has not really known the details of the program designed to help people own a house.

"I'm not interested in checking the details," he says. The subsidy scheme feels far removed from his daily reality, as his financial situation requires him to prioritize other things.

Not to mention the duration of the installments of these programs. The repayment of installments for up to 20 years feels too long for Juan, plus the risk of floating interest and the current unstable economic conditions.

He also thought about the worst-case scenarios, such as losing his job or increasing family responsibilities. Without a safety net, paying off a house even with government assistance, according to Juan, is like running a marathon without a clear finish line.

As the backbone of the family, he doesn't have the luxury of defaulting. "We are our own safety net ," he says, describing a generational position that supports both parents and younger siblings.

Every financial decision must maintain that delicate balance. The house, in Juan's calculations, had not added value at the same rate as the risk.

In the end, rather than owning his own home, renting made more sense for Juan. He didn't have to think about property tax, fixing a leaky roof, or the cost of a renovation permit.

Say if the landlord suddenly raises the rent, Juan says he can still move elsewhere without the burden of a bank penalty. This flexibility suits him better as a sandwich generation.

Generation Z and subsidized housing

Young people like Juan are now faced with difficult choices when it comes to fulfilling primary needs such as housing. On the one hand, professionalism can now be supported through technology. But they are also overshadowed by uncertainty. The concept of being well-established, in this case related to having a decent place to live, is still far from the fire.

So it is not strange that finally the youngest generation of the workforce today, such as Generation Z, is the age group that uses the most government incentives in home ownership programs. According to data from the Public Housing Savings Management Agency (BP Tapera), Generation Z or Gen Z now dominates the purchase of subsidized housing throughout 2024. The total units purchased reached 124,889 units.

Head of the BP Tapera Communication Secretariat Division, Alfian Arif, explained that the dominance of Generation Z in purchasing subsidized housing is based on data on the distribution of houses through the FLPP scheme. When detailed, throughout 2024 the realization of FLPP distribution for the Gen Z segmentation - namely those born in the 1997-2012 period or aged 19 years-30 years - reached 124,889 units, equivalent to 62.35%.

The figure shows that Gen Z will be the largest consumer of subsidized housing during 2024. The total FLPP distribution last year reached 200,300 units. "This means that FLPP is a solution for Gen Z to own a house," he explained.

In detail, FLPP distribution to consumers aged 19 years-25 years reached 66,746 units (33.32%), while for ages 26 years-30 years there were 58,143 housing units (29.03%).

BP Tapera data also shows that the distribution of subsidized houses to other age groups is lower. Consumers aged 31 years-35 years were recorded at 33,916 units (16.93%), those aged 36 years-40 years were 20,687 units (10.33%), and consumers over 40 years were 20,808 units (10.39%).

Responsible income generation

Deputy Chairman of Real Estate Indonesia, Bambang Ekajaya, believes that the 2025 housing incentive policy has not fully addressed the needs of Gen Z in Jakarta and its surroundings. According to him, Gen Z is mostly classified as a responsibility income community or MBT, which does not receive adequate support.

"Gen Z who enter MBT are immediately subject to commercial interest - up to 12 percent - so the installment burden is heavy," said the Deputy Chairman of Real Estate Indonesia (REI). Meanwhile, the low-income group (MBR) clearly gets 5% interest, free VAT, and free BPHTB.

He explained that although there is currently a government-borne VAT program until the end of the year, its implementation is constrained by the availability of ready-to-live units. According to him, only some developers currently have ready-to-use houses within the next five months. On the other hand, Gen Z, which is not categorized as MBR, has to bear the burden of title transfer and high interest rates.

The government did raise the MBR income limit to around Rp14 million per month. However, for Gen Z whose income is slightly above that, all facilities are immediately lost.

This group will eventually have to go to a full commercial credit scheme, despite its huge contribution to the digital economy. Bambang proposed a partial subsidy for MBTs, such as covering half of the interest rate.

This group will eventually have to go to a full commercial credit scheme, despite its huge contribution to the digital economy.

For Gen Z whose income is still in the MBR category, the main problem is not the interest rate, but the location of the house. Subsidized houses are generally located far from the city center and workplace. Bambang thinks the solution can be found through the concept of rusunami. Unfortunately, according to him, rusunami is difficult to run in the FLPP scheme.

According to him, rusunami projects are not attractive to developers because the construction costs are higher than the set selling price. REI is working on one rusunami project as a price and concept simulation.

Bambang does not want to mention the location and developer, but he hopes the government is willing to consider it. Rusunami is considered the most suitable solution for Gen Z.

In addition, the construction of subsidized housing will be superior if it uses the concept of transit oriented development (TOD), which combines housing with access to public transportation such as KRL, MRT, and LRT. The location is in the middle of the city and surrounded by complete facilities. "People can move quickly and cheaply," said Bambang.

He emphasized that this concept must be prioritized so that the target of building three million houses can be achieved.

Waiting for foreign investment to come in

The government has actually encouraged the sale of low-cost housing through various schemes. One of them is FLPP. However, FLPP is currently only targeting the construction of 350,000 units per year. In fact, the national new housing target reaches one million units per year.

The rest is in the form of renovation and construction of village houses worked on by cooperatives. The non-FLPP scheme only added around 150,000 units, so the total new supply is still far from the target.

This shortage of housing supply, according to Bambang, will have an impact on the increase in the housing backlog . Currently, the backlog reaches 15 million units, and the trend is increasing every year. Vertical solutions such as rusunami are considered important to cover the shortage.

REI had welcomed the foreign aid plan that targets the construction of one million vertical dwellings. But until now, the plan is still a concept. "Until now we haven't heard anymore," he said.

He fears that such programs will simply end without follow-up.

Bambang also highlighted the role of the Ministry of PKP, which is still slow to adapt after being separated from the PUPR Ministry. The focus of the policy is considered not on target. He criticized the emergence of the "housing bulog" discourse from Fahri Hamzah, Deputy Minister of PKP, which was considered to simplify the problem. "Houses are not the same as rice," he said.

Another problem plaguing the sector is land issues, particularly the expropriation of abandoned land. The absence of clear boundaries has caused panic among entrepreneurs.

Bambang believes that all these issues have divided the energy of the housing sector. He suggested that the ministry focus on achieving the new housing target, including for Gen Z.

Regarding the additional FLPP quota, Bambang believes that the market is still capable of absorbing close to 400,000 units. However, the challenge lies in funding that is not always ready. "If the funding is ready, the market and developers will have no problem," he said.

He reiterated that for Gen Z, the most realistic solution is vertical housing with partial subsidies. The MBT group that earns up to Rp25 million should receive interest assistance. Another scheme that can be encouraged is the reduction of BPHTB from 5% to 2.5%. Combined with VAT DTP, this would give a total incentive of 12.5%.

REI also plans to encourage DKI Jakarta Province to reduce BPHTB rates to serve as an example for other regions. The authority to regulate BPHTB is at the provincial level. If Jakarta starts, other provinces are expected to follow suit. This step can make urban housing more affordable.

Decrease in commercial interest rate

According to Bambang, there are still many Gen Zs who have not prioritized home ownership due to various concerns. They are worried about floating interest rates, long tenors, and the distant location of the house.

He emphasized the importance of educating people that a house is a long-term asset. "Houses can be savings against inflation," he said.

He said a subsidized house 20 years ago was only worth Rp10 million, but now it is worth Rp170 million. The significant increase in value shows that a house can be an investment. For Gen Z, this can be a consideration in making decisions. Education about the long-term benefits of housing must be strengthened.

To overcome the obstacles, REI proposes that the government lower the commercial interest rate for MBT. If the interest rate drops just a little, houses worth Rp500 million in strategic locations can be absorbed. Middle-class developers will contribute more actively if this scheme is implemented. Partial subsidies can be an effective bridge between MBR and the middle class.

The long-term solution, Bambang suggested, is to strengthen the Public Housing Committee chaired by Hashim Djojohadikusumo. This committee involves REI, banks, developer associations, local governments, and the National Land Agency (BPN).

He believes cross-sector coordination within the committee will streamline licensing, funding, marketing, and subsidy allocation. "The committee can coordinate everything," he said.

On the other hand, with the development of housing distribution for which there is no official data, the government needs to be more transparent regarding this policy. Even BCA Chief Economist David Sumual said, the government needs to think comprehensively whether the target of building 3 million housing units is still realistic or not.

Because this policy must be directed and based on the demand and supply side. Based on current conditions, the demand for housing loans, especially subsidized houses, continues to increase.

The increase in demand is inseparable from government incentives through the Housing Financing Liquidity Facility (FLPP) scheme. "There are even several banks whose housing loan distribution facilities are dominated by FLPP," David Sumual told SUAR.

He explained that most of the profiles of home seekers are still dominated by the millennial generation, because in terms of income, they are able to pay in installments. Meanwhile, Generation Z mostly still likes to have fun and has no target to buy a house.

Most of the profiles of home seekers are still dominated by the millennial generation, because in terms of income, they can afford to pay in installments. Meanwhile, Generation Z mostly still likes to have fun

Meanwhile, property observer who also serves as Head of Research Coldwell Banker Richard Ellis (CBRE) Indonesia, Anton Sitorus, assesses that Gen Z's interest in owning housing is very low. This phenomenon does not only occur in Indonesia, but throughout the world.

He also agrees that most Gen Z prioritizes gadgets, vacations, and fashion over buying a house. The main factor that causes Gen Z's lack of interest in buying a house is the lack of income. 

There are some Gen Zs who have an interest in buying a house because of financial support from family or income that is above the minimum wage.

Government breakthrough

The lack of penetration of housing distribution, especially to Gen Z, has prompted the government to make a breakthrough. One of them, in September, the Ministry of Housing and Regional Settlements will again launch 25,000 subsidized houses intended for people with special professions.

Various segments of special professions that will receive priority, such as farmers, fishermen, laborers, journalists, health workers, and other community members. " Anybody will be able to own one. So we will make it massive, because this program is very beneficial for the people, the DP is 1% and then the other 5% is subsidized," said Minister of Housing and Settlement Areas (PKP) Maruarar Sirait.

The subsidized housing financing scheme uses an interest rate of 5%, much lower than the commercial housing scheme which reaches 12%. This is claimed to be an interesting breakthrough and a lot of interest.

The launch of 25,000 subsidized houses is part of the program to increase the national subsidized housing quota. In 2025, through the Housing Financing Liquidity Facility (FLPP), it is targeted that the supply of subsidized houses will reach 350,000 units. This number is up from around 200,000 units in the previous year.

Another breakthrough is the rollout of the People's Business Credit (KUR) specifically for the housing sector. The budget for this program is directly supported by Danantara's Investment Management Agency (BPI) - which is committed to disbursing Rp130 trillion through KUR financing in the housing sector.

The KUR Housing distribution scheme will run in two channels. From the housing supply side, which will be related to developers and the housing ecosystem to produce quality and livable homes, with a budget ceiling of Rp177 trillion.

The reverse side is the demand side with a budget of Rp13 trillion that will connect with people who want to develop businesses in the housing sector, such as building shop houses and homestays, so as to encourage economic improvement and community welfare.

Mukhlison, Harits Arrazie, and Ridho Syukra