Indonesian Government Extends PPN DTP for Housing Sector

Policy Details and Economic Context

The Indonesian government has announced the continuation of its 100% Value Added Tax (PPN) subsidy for residential property purchases through the end of 2026 ¹

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Source 2

https://industri.kontan.co.id/news/ppn-dtp-100-rumah-tapak-dan-apartemen-diperpanjang-rei-soroti-tantangan-ini

. This policy, formalized through Minister of Finance Regulation No. 90/2025, aims to stimulate the property market by reducing the financial burden on homebuyers. The subsidy applies to residential houses and apartments with a maximum price of Rp 5 billion, with properties valued up to Rp 2 billion receiving full tax coverage ¹

Source 1

https://keuangan.kontan.co.id/news/perbankan-berharap-insentif-bisa-dorong-penyaluran-kpr-lebih-kencang

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Market Conditions and Rationale

This fiscal incentive comes as the property sector faces challenging market conditions. According to Bank Indonesia data, mortgage growth slowed to 6.9% year-over-year in November 2025, reaching a total of Rp 834.7 trillion. This growth rate trails behind the overall credit growth of 7.74% during the same period. Moreover, the Non-Performing Loan (NPL) ratio for residential property loans has increased to 3.21% as of November 2025, up from 2.69% in the same period the previous year ¹

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Industry Response and Challenges

The Real Estate Indonesia (REI) association has welcomed the policy extension, noting that it represents one of their key proposals. However, industry representatives have highlighted that while the incentive provides positive stimulus, several challenges remain in the market. The effectiveness of this policy will depend on various factors including overall economic conditions and consumer confidence in the property market ²

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