Abstract :
Indonesia has been a late starter in the development of a modern housing-finance system. Its growth has been constrained, among other things, by a housing-delivery system that encourages informal housing that cannot be formally financed, by the repressive effect of a small volume of heavily subsidised loans, and by a financial system which has few sources of long-term finance. Nevertheless, an environment of financial deregulation has recently generated some innovative responses from the countryʹs bankers and policy makers, including development of a secondary mortgage facility, and the marketing of short-term, small, non-mortgage construction loans. This paper describes recent changes in housing finance in Indonesia in their political and economic context, and conjectures that conditions are now sufficiently stable for the market to continue to mature.
