As affordable housing becomes less accessible, Indonesians born between 1997 and 2012, known as Gen Z, are more inclined to rent rather than buy a property, several reports have found.
Two out of three Gen Z respondents are pessimistic about the prospect of buying a house within the next three years, according to a survey by Inventure in September. Around 80 percent of them cited surging house prices as the primary reason.
Contributing factors include insufficient income, unstable employment and a preference for experience-based consumption such as concerts, holidays and gadgets. Others especially pointed to difficulties in obtaining a mortgage and existing debt burdens that prevented them from taking out housing loans.
The survey also shows 38 percent favoured rent-to-own arrangements, while 34 percent preferred short-term rental agreements.
Similarly, according to data from Jakpat in 2023, over 36 percent of Gen Z respondents were reluctant to buy a property and opted for renting.
Among those, 36 percent said they were not financially ready to buy property, while 22 percent considered renting more affordable, followed by 18 percent who preferred to rent due to a strategic location.
Despite their reluctance, the report also noted that developers often market their properties to Gen Z as potential buyers, indicating that although Gen Z is yet to be financially capable of buying a property, they continue to aspire to become homeowners.
Rukita, a proptech company in Indonesia said on Wednesday that it observed a similar decline in homeownership among the Gen Z age group, citing property prices that have risen faster than the income growth of average Indonesians.
The company manages more than 1,300 properties across 21 big cities in Indonesia, providing homes for more than 50,000 people every year, with more than 50 percent of its tenants aged below 27 years.
Renting has become an alternative option for those who prefer to avoid long commuting times from the outskirts of Jakarta, given that homeownership in the city center is unaffordable.
The Pinhome Home Value Index (PHVI) and the Pinhome Home Rental Index (PHRI) has also recorded an increasing trend for renting over buying, with the first quarter of this year showing a 55 percent rise in demand for home rentals compared with the 2023 quarterly average.
The report, which was released in June, also pointed to high interest rates and financial unpreparedness as among the reasons people were opting to rent instead of purchasing homes.
