The future of the Balinese real estate market 

In 2014, a strong, stable economy began to emerge in Indonesia. This phenomenon started thanks to the growing rate of the real estate market with a higher urbanization and rapid population growth to affordable housing projects. Bali is attractive for foreigner and domestic residents, families and young couples where they can find a more balanced lifestyle away from the megacities. After the COVID aftermath did the property prices drop where tourism was back on the rise in Bali but also where the huge digital nomad hub is still getting bigger. Next to this is the Indonesian economy doing better considering that Indonesia is a more affordable country compared to other SEA countries. That’s how 2021 was the year to invest in a Balinese property with the lowest interest rates ever and the growing demand of tourists and expats. 

But can we predict the same forecast for the housing market in 2023 or the next years for Bali? In 2022, did we also predict a prosperous year for the housing market but the rising inflation, mortgage rates or Russian- Ukrainian war decided differently about it. Compared to 2021 did the housing market significantly cooled down with declining home sales and moderate rising prices. The difficulties are not only regarding the buyers and sellers but also the constructors. All operated renovations by property owners are way more expensive than normal with the shortage of supplies. Due to the shortage of supplies did the prices of renovations grow considerably, which is why people now reconsider the worth of their wished renovation and investment in their property. This problem could even more escalate since that the U.S. oil embargo on Russia can lead to even more problems with the supply-chain issues which will contribute to even higher interest rates and distrust of the population in the economy and so also in considering the investment in a new property. It is unlikely that a housing crisis rises like in 2008 since the lending standards are tighter due to lessons learned and new regulations enacted after that crisis. But it is expected that the second half of 2022 and throughout 2023 the housing sales are anticipated to dip even if employment remains globally high to a slower pace compared with 2021. 

The housing market is not collapsing, but it is heading towards a more balanced condition where it is in a transition driven by an uncertain economy and consumer backdrop. The inflation is hot and has to be considered as a danger to the housing market and economy since it could even escalate to stagflation if we fail to address the shortages in housing supply.