In a significant push to tackle the growing housing crisis in Indonesia’s urban centers, the government has rolled out new regulations to expand eligibility for subsidized housing. Announced on April 11, 2025, in Jakarta, the updated criteria now allow higher-income individuals to access affordable homes, particularly in Greater Jakarta, where living costs have soared. The move, driven by the Public Housing and Settlements Ministry, aims to bridge the gap between escalating property prices and stagnant wage growth, offering a lifeline to thousands of aspiring homeowners.
New Income Thresholds for Greater Jakarta
Under the revised rules, set to take effect on April 21, 2025, unmarried individuals earning up to 12 million Indonesian Rupiah (US$708) per month are now eligible for subsidized housing in Greater Jakarta. Married individuals with a combined monthly income of up to 13 million Rupiah (US$767) also qualify. This marks a substantial increase from the previous income cap of 8 million Rupiah (US$472), reflecting the government’s recognition of regional disparities in living costs. 
Housing Minister Maruarar “Ara” Sirait emphasized the necessity of this adjustment during a press briefing on Tuesday, as reported by Kompas.com. “This applies to all groups, but specifically in Greater Jakarta, in line with a suggestion from BPS [Statistics Indonesia]” he said. Sirait underscored that the policy is designed to expand housing access to a broader segment of the population, particularly in areas where high land prices have made homeownership a distant dream for many.
Amalia Adininggar Widyasanti, head of BPS, provided further context, explaining that the new income thresholds were calculated to reflect the economic realities of different regions. “The standard of living in each province is different. Greater Jakarta, for example, has higher living costs, so we set [the new threshold]” she noted. This data-driven approach aims to ensure that the policy targets those genuinely struggling with affordability, even if their incomes exceed traditional low-income brackets.
Special Programs for Key Professions
Beyond adjusting income criteria, the government has introduced targeted initiatives to support specific professional groups. On the same day as the income cap announcement, Sirait, alongside Communications and Digital Minister Meutya Hafid, launched a program to provide 30,000 subsidized homes for journalists. This initiative acknowledges the financial challenges faced by media professionals, many of whom work in urban centers with prohibitive housing costs.
Additionally, during the first day of Idul Fitri on March 31, 2025, Sirait unveiled plans to construct 70,000 subsidized homes for workers in critical sectors such as health, education, and fisheries. This project, part of President Prabowo Subianto’s ambitious “3 million homes” program, allocates 30,000 units for health workers, 20,000 for teachers, and 20,000 for fishers. The initiative has secured significant funding through Bank Indonesia’s liquidity incentive policy, which supports banks in the housing sector, as well as partnerships with BP Tapera (Public Housing Savings Management Board) and state-owned lender Bank Tabungan Negara (BTN).
Heru Pudyo Nugroho, a commissioner at BP Tapera, highlighted the challenges of ensuring affordability in major cities. “Many [low-income earners], especially in big cities, have incomes above 8 million Rupiah, but they can’t access affordable housing. Why? Because land prices are high” he told detikFinance. Nugroho advocated for further adjustments to housing programs, suggesting that current mechanisms like the Housing Finance Liquidity Facility (FLPP) must evolve to address urban-specific barriers.
Financial Mechanisms and Economic Implications
The expansion of subsidized housing is underpinned by enhanced financial support mechanisms. Sirait noted that the government has increased this year’s quota under the FLPP, a program designed to assist low-income earners purchasing their first home. By boosting liquidity for banks offering mortgage loans, the policy is expected to generate significant revenue for financial institutions while making homeownership more attainable. The involvement of BTN and potential collaborations with other banks further signal the government’s commitment to scaling up access to subsidized mortgage loans (KPR).
Economists have welcomed the policy as a step toward addressing Indonesia’s urban housing crisis, though some caution against over-optimism. Rising land prices in Greater Jakarta and other metropolitan areas remain a formidable obstacle, with many low- and middle-income families still priced out despite the higher income caps. The government’s partnership with financial institutions will be crucial in ensuring that mortgage terms remain favorable for applicants, particularly those in higher income brackets who may face skepticism from lenders accustomed to stricter eligibility criteria.
Moreover, the “3 million homes” program, while ambitious, raises questions about implementation capacity. Constructing millions of units requires not only funding but also efficient coordination between central and local governments, as well as private developers. Past housing initiatives in Indonesia have faced delays due to bureaucratic hurdles and land acquisition disputes, challenges that could resurface as the program scales up.
Broader Context of Indonesia’s Housing Crisis
Indonesia’s housing crisis is a multifaceted issue, driven by rapid urbanization, population growth, and economic inequality. Greater Jakarta, home to over 30 million people, exemplifies these challenges, with sprawling informal settlements contrasting sharply against gleaming high-rises. The border areas between Jakarta and neighboring provinces, often depicted in striking aerial imagery, reveal the patchwork of housing complexes struggling to accommodate a burgeoning population.
According to a 2023 report by the World Bank, Indonesia faces a housing backlog of approximately 12.7 million units, a figure exacerbated by the COVID-19 pandemic’s economic fallout. While the government has made strides in addressing this deficit through subsidized programs, critics argue that systemic issues—such as speculative land markets and inadequate urban planning—continue to hinder progress. The new income thresholds and targeted housing initiatives are thus seen as incremental rather than transformative solutions, though they provide immediate relief to specific demographics.
Public sentiment, as reflected in discussions on platforms like X, reveals a mix of hope and skepticism. Many Jakarta residents express relief at the expanded eligibility, with some sharing personal stories of saving for years only to be outpaced by rising property costs. Others, however, question whether the policy will truly benefit middle-income earners or simply inflate demand, further driving up prices in an already strained market.
Regional Disparities and Future Adjustments
The government’s decision to tailor income thresholds to regional living costs opens the door to further customization in other provinces. Areas like Surabaya and Bandung, which also grapple with high urbanization rates, may see similar adjustments in the future. However, this approach risks creating disparities between regions, with rural and less economically developed areas potentially receiving less attention. Balancing national housing goals with localized needs will be a key challenge for policymakers in the coming years.
Additionally, the focus on urban centers like Greater Jakarta highlights the need for complementary policies addressing rural housing. Many Indonesians migrate to cities in search of better opportunities, only to encounter unaffordable living conditions. Strengthening rural infrastructure and incentivizing regional development could alleviate some of the pressure on urban housing markets, creating a more equitable distribution of resources.
Looking Ahead
As Indonesia’s subsidized housing policies take shape, their success will hinge on execution and adaptability. The increased income caps and targeted programs for journalists and essential workers signal a willingness to innovate, but they must be matched by efforts to control land prices and streamline construction processes. For now, thousands of families in Greater Jakarta and beyond hold onto the hope that these changes will finally make homeownership a reality.
With President Prabowo Subianto’s “3 million homes” vision looming large, the coming months will test the government’s ability to deliver on its promises. As reforms unfold, one question lingers: can Indonesia build not just houses, but sustainable communities for its rapidly growing population?
