Pinhome Exclusive Report: The Sandwich Generation’s Path to Homeownership
EXECUTIVE SUMMARY
MARKET REPORT
Written by
8 October 2024
Sandwich Generation Motivation in Homeownership
Family Needs Become the Main Motivation of the Sandwich Generation in Homeownership
The Sandwich Generation, identified as group of individuals juggling the care of their aging parents and the financial support of their children or siblings, encounters notable financial challenges.
Source: YouGov, Pinhome Research
Despite financial challenges, the Sandwich Generation still shows a strong demand for achieving their dream of owning their own homes. The primary motivation driving the Sandwich Generation to purchase homes is family needs. According to YouGov survey, a 49% of them place this need as the highest priority in their home-buying decisions.
For those who chose landed houses, a home is not just a place to live, but also a symbol of security and stability for their families. Stability becomes an important reason for those who choose landed properties, reflecting a desire to settle in one place and conclude the often-recurring uncertainty associated with moving between properties.
On the other hand, for those who opt for apartments, in addition to meeting family needs, there are other factors considered. One such factor is the market opportunities and investment potentials offered by apartment ownership. This generation views apartments not only as a dwelling place but also as a long-term investment that can be profitable in the future.
What are the motivations for homeownership for Sandwich Generation?
Questionnaire with multiple-answers can result in total percentages exceeding 100%.
Source: YouGov, Pinhome Research
Challenges of the Sandwich Generation in Property Ownership
The Biggest Challenge is Finding the Right Property
The Sandwich Generation faces various challenges in their efforts to own a home. According to the data, the biggest challenge they encounter is finding the right property, as noted by 36% of the Sandwich Generation. This is followed by excessive additional costs (35%), such as insurance and notary fees, and high installment payments (34%).
What challenges does the Sandwich Generation face in purchasing property?
Questionnaire with multiple-answers can result in total percentages exceeding 100%.
Source: YouGov, Pinhome Research
For the Sandwich Generation who successfully purchased a landed house in the past year, finding a property that fits their needs and budget was the main challenge, especially in an increasingly competitive property market filled with diverse choices and limited support or tools available to assist in the property search.
Conversely, those in the Sandwich Generation who chose apartments as their living option faced different challenges. Based on their experiences in the past year, property condition became a major issue, with nearly half (47%) stating that they had to deal with maintenance or renovation issues in the property they purchased. This highlights that while purchasing an apartment may offer investment potential, it also brings its own set of challenges, particularly in maintaining the property’s livability.
The External Support Needed: Financial Advisors & Others
In facing these various challenges, the Sandwich Generation greatly needs support from various parties, especially financial advisors who can help them plan and manage their finances more effectively. A total of 39% indicated that support from financial advisors is crucial during the home-buying process.
Additionally, the roles of property appraisers (38%), legal assistance (37%), property inspectors (36%), property consultants (35%), and architectural support (34%) were also deemed important to ensure they make well-informed and sound decisions. These roles not only assist them during the purchasing process but also provide a sense of security and confidence that the decisions made are the best for their future and family.
What support does the Sandwich Generation need during the property purchase process?
Questionnaire with multiple-answers can result in total percentages exceeding 100%.
Source: YouGov, Pinhome Research
Property Purchase Budget Sources
The Majority of the Sandwich Generation Uses Personal Savings as the Primary Source of Financing for Property Purchases
Based on the results of a survey we conducted among the Sandwich Generation who purchased property in the past year, the majority (53%) used personal savings as the primary source of funding for buying a home. Additionally, 29% received support from their families to help realize their dream of homeownership. Meanwhile, only 28% utilized Mortgage Loans, Home Ownership Loans (KPR) or Apartment Ownership Loans (KPA), and 26% opted for other alternative loans, such as unsecured loans (KTA) or microloans (KUR).
How does the Sandwich Generation plan for property purchase financing?
Questionnaire with multiple-answers can result in total percentages exceeding 100%.
Source: YouGov, Pinhome Research
of the Sandwich Generation used a combination of
personal savings and family supports
for property purchases.
Among the Sandwich Generation who successfully purchased property in the past year, personal savings were the primary budget source. Additionally, 33% relied on support or loans from family, 26% utilized other loans such as unsecured loans (KTA) or microloans (KUR), and 25% used proceeds from the sale of assets. A combination of personal savings and family financial assistance was the most commonly used budgeting option, chosen by 18% of the Sandwich Generation.
A combination with personal savings is the primary budget source for almost all other funding options. However, an exception exists among the Sandwich Generation who used pension withdrawals and social security funds. Of those who withdrew pension funds, 51% combined them with non-bank loans, such as unsecured loans (KTA) or microloans (KUR). On the other hand, 48% of those who withdrew social security funds also received support or loans from family.
Market Dynamics in Property Purchase Financing
Conservative Behavior Reflected in Lower Loan Ceilings, Shorter Installment Terms, and the High Demand for KPR Take Over
The steps taken by the Sandwich Generation in budgeting for property purchases are closely linked to broader market dynamics. In the second quarter of 2024, Bank Indonesia raised the benchmark interest rate by 25 basis points to 6.25%, as part of its efforts to maintain economic stability amid growing global uncertainties. This increase in interest rate had a direct impact on the financing sector.
Quarterly growth (QoQ)
total mortgage (KPR/KPA) transaction
As a result of the benchmark interest rate increase, demand for KPR and KPA declined by 8% in the second quarter of 2024 compared to the first quarter. The rising cost of borrowing became a key factor limiting purchasing power, impacting people's decisions to access KPR and KPA products.
Quarterly growth (QoQ)
loan ceiling for mortgage (KPR/KPA) transaction
In addition, the 3% decrease in the median loan ceiling for home financing requests reflects a more conservative approach by consumers when taking out large loans. Consumers tend to opt for more affordable homes or save up for a larger down payment (DP) before applying for KPR or KPA, in response to economic uncertainty and stricter banking policies.
Among the Sandwich Generation who opted for mortgages (KPR or KPA), there is a tendency to choose shorter installment terms. As many as 26% of KPR users selected a 1-5 year term, followed by 25% choosing a 6-10 year term, and 23% opting for an 11-15 year term. This data indicates a preference among the Sandwich Generation for faster loan repayment, reflecting their conservative approach to managing debt amid various financial demands.
How long is the loan term (tenure) for KPR or KPA chosen by the Sandwich Generation when purchasing property?
Source: YouGov, Pinhome Research
In market dynamics, KPR Take Over transactions dominate (60%) of the total property purchase financing demand, reflecting consumers' desire to seek more stable and favorable financing conditions, especially amid uncertain economic conditions.
Pinhome offers a KPR Take Over Simulation feature that allows users to easily calculate and compare various refinancing options for KPR, helping to reduce the burden of installments..
By entering details of the ongoing KPR, users can see potential savings by switching to another bank offering lower interest rates or more flexible terms. This feature also provides recommendations for the best banks and estimates related costs, enabling you to make smarter and more informed financial decisions.
Preference Adjustments
New Houses in Suburban and New Apartments in Urban Areas as Affordable Housing Options for the Sandwich Generation
Based on the results of a survey we conducted among the Sandwich Generation who purchased property in the past year, it reveals their flexibility to adapt their preferences to meet their housing needs within their available budget.
of the Sandwich Generation who own a landed house purchased it as a
new houseThe majority of landed house owners have opted for building size of 22-36 m², reflecting a need for housing that is efficient yet functional. In terms of bedrooms, 2 bedroom houses are the primary choice (48%), followed by 3 bedroom houses (31%). This indicates that the Sandwich Generation is seeking housing that adequately meet the needs of their core family without being excessively large.
Preference Adjustments of the Sandwich Generation Opting for Apartment
of Sandwich Generation who chose apartments opted for a
new apartmentIn terms of size, there is an even distribution between apartments with a size ≤ 21 m² (20%) and those with a size of 61-70 m² (21%). This reflect the needs for housing that is practical yet offers sufficient space. Regarding the number of bedrooms, 3 bedroom units become the most preferred option (27%), followed by 1 bedroom unit (23%), 2 bedroom unit (22%), and studio (22%).
Market Dynamics in Home Buying
Increase in Housing Preference for the Lower-Middle Segment in Sub-Urban Areas
In the second quarter 2024, the Indonesian property market has shown interesting dynamics, particularly in the residential segment. Recent data reveal a significant increase of 8% in the purchase of lower-middle segment houses compared to the first quarter of this year. In contrast, the luxury house segment, which include properties priced above 3 billion rupiah, experienced a drastic decrease up to 26%.
Quarterly growth (QoQ) in the segment of
lower-middle houses
Quarterly growth (QoQ) in the segment of
luxury houses
In the second quarter of 2024, the property market in Jabodetabek shows an intriguing trend, particularly in the lower-middle house segment. Data reveals that the majority of purchases in this segment are concentrated in Bogor Regency and Bogor City, accounting for 56% of the total. This indicates that the Bogor area is becoming the preferred choice for consumers seeking affordable housing in the sub-urban areas of Jabodetabek.
On the contrary, Jakarta only contributes 2% of the total purchase in this housing segment. This low percentage reflects the challenges faced by homebuyers in the capital, where high property prices and limited land availability make it difficult for lower-middle segments to find a house that fit their budget. As a result, many homebuyers in Jakarta opt to look for housing in sub-urban areas, such as Bogor, which offer a combination of affordability and better quality of life.
Proportion of Lower-Middle Price House Purchase in Quarter 2 2024 in Jabodetabek
Availability of Affordable Home Inventory
Lower-Middle House Price Segment Leads House Inventory Growth
The lower-middle house price segment experienced the highest growth (127)% compared to other segments in Q2 2024 (YoY). According to the latest Pinhome Home Value Index (PHVI 2024 Q2), houses with a building size of type ≤ 54 in Depok City and Tangerang City are the most recommended for first-time home, as the selling price of this type of house has decreased by up to 5%.
Quarterly growth (QoQ) of additional new house inventory in the
lower-middle house segmentQuarterly growth (QoQ) of additional new 2BR house inventory in the
lower-middle house segmentLooking further, secondary houses in the lower-middle price segment have shown a dominant growth in the total inventory of secondary houses. The total inventory of secondary houses in Q2 2024 grew by 500% compared to the same period the previous year.
Growth of Total Inventory of Secondary Houses in the Lower-Middle Price Segment
Did you know? Property Trends from West to East Indonesia
Property development is becoming more widespread across Indonesia, from west to east.
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In the western part of Indonesia, Aceh, North Sumatra, and South Sumatra have experienced a more than fourfold increase in the inventory of secondary residential properties (YoY).
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Meanwhile, in central Indonesia, such as DKI Jakarta and Bali, the proportion of rental residential property inventory to the total residential property inventory is twice as high compared to the proportion of rental residential property inventory in the overall Java and Bali regions. East Kalimantan and North Sulawesi in central and eastern Indonesia have seen a surge in commercial property inventory by up to elevenfold.
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Property trends in eastern Indonesia show that in Maluku and Nusa Tenggara, the growth of commercial property inventory is also higher compared to residential property. In contrast, in Papua, inventory growth is led by residential properties.
Property Search
Strategic Steps of the Sandwich Generation in Property Search: Exploration, Legalities, and Utilization of Digital Tools
After completing the preference adjustment process based on budget planning, the next step in the journey toward homeownership is finding the right property. At this stage, the Sandwich Generation begins to focus their attention on exploring the available options in the market. This process includes various activities that not only aim to find properties that align with their preferences and budget but also ensure that every step is taken with accurate information and adequate assistance.
Based on a survey we conducted with the Sandwich Generation who purchased properties within the past one year, the majority mentioned that important steps in the property search include exploring areas (56%), checking legality of property/house (48%), and online searches (44%).
Important Steps in Property Search
The Sandwich Generation also utilizes various digital tools to aid their search process. Social media platforms (e.g., Twitter, Instagram, Facebook, etc.) are the most frequently used (63%), followed by mobile property apps like Ray White, ERA, Century 21, etc. (35%), and web-based property sites (34%).
Property Search Tools Used by the Sandwich Generation
Direct Consultation Becomes a Crucial Source of Information in the Property Search Process for the Sandwich Generation
Information Format Preferences in Property Searches Based on Age Groups by Generation
Market Trends in Property Purchase Search
Lower-Middle House in Suburban Areas Reflected During the Second Quarter of 2024
Based on a survey we conducted with the Sandwich Generation who purchased properties within the past one year, it was found that the majority of this generation chose properties with land sizes of 54 m² or smaller (53%), while another 31% opted for properties with land sizes of 55-120 m². Meanwhile, for building size, the majority of landed house owners also purchased houses with smaller building sizes, specifically 54 m² or less. This preference was also reflected in property search trends on the Pinhome platform during the second quarter of 2024, particularly for lower-middle house, in the price range of 200 to 600 million rupiah.
Preference Adjustments of the Sandwich Generation Who Successfully Purchased Property in the Past One Year
of total property purchase searches
Property search proportion of
lower-middle house segment
of total property purchase searches
Property purchase search growth of
lower-middle house segment
In the second quarter of 2024, 36% of total property purchase searches were for lower-middle house segment. Property purchase searches in the lower-middle segment in the second quarter of 2024 grew by 287% compared to the same quarter in the previous year.
Furthermore, there is a variation in lower-middle house search trends based on area:
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In East Jakarta, Greater Bogor, and Greater Tangerang, searches for homes with a size of 55-120 m² are more dominant compared to those of 54 m² or smaller. This indicates a consumer preference for living in suburban areas to obtain larger homes at affordable prices.
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On the other hand, in areas of DKI Jakarta, excluding East Jakarta, homes with a size of 54 m² or smaller are more favored, offering the most affordable prices.
Growth in Property Searches by Property Building Size Second Quarter of 2024 Compared to Second Quarter of 2023
Apartment Search Trends Also Show Significant Growth
Growth of searches in
2BR apartments 1.8xfaster than 1BR apartments
Searches for buying apartments increased by 131% in the second quarter of 2024 compared to the same quarter in the previous year. When viewed by the number of bedrooms, searches for two-bedroom (2BR) apartments grew by 220%. This growth is 1.8x faster compared to one-bedroom (1BR) apartments.
Property Selection
Important Factors of the Sandwich Generation in Choosing Property: Healthcare Access, Work Location, and Security
When selecting a home, the Sandwich Generation demonstrates a clear preference for factors that support their family’s well-being. According to survey results, the three main factors most considered are close to healthcare facilities (64%), close to office (62%), and the safety and comfort of the surrounding environment (60%).
Additionally, the survey results show that 55% of the Sandwich Generation from Gen Z prefer properties close to shopping centers, a higher percentage compared to the Sandwich Generation from the Millennial group (34%). This indicates that Gen Z places more emphasis on quick access to commercial facilities in their daily lives.
Important Factors of the Sandwich Generation in Choosing Property
Average monthly growth (MoM) in Q2 2024
searches near healthcare facilities and officesProperty selection factors also influenced property search patterns during the second quarter of 2024. Pinhome's internal data shows monthly growth in property searches with the keywords “near healthcare facilities” and “near offices”. Additionally, other keywords also saw average monthly growth, such as property searches “near malls” (+22%), “near schools” (+19%), and “near public transportation” (+7.6%).
Alternative Homeownership
If homeownership is still out of reach, renting can be a viable alternative for the Sandwich Generation. Renting allows them to meet their family's needs without the burden of mortgage installments and additional costs often associated with homeownership, while also offering flexibility in choosing a home that suits their preferences.
Quarterly Growth (QoQ)
Total Rental Housing Inventory +26%in Q2 2024
Rental housing options become more diverse as total inventory grows. In Q2 2024, the total inventory of rental housing increased by 26% compared to the previous quarter, with a 28% rise in apartment rentals and a 23% increase in house rentals. This diversity offers more options for families to find rental properties that meet their needs and preferences.
Market Trends in Property Rentals
Rental Houses Type 55-120 in Sidoarjo Regency, Bekasi Regency, and Bogor City (Sub-urban Areas) Experience Price Drops
Sidoarjo Regency, Bekasi Regency, and Bogor City have become attractive options for those seeking rental houses of type 55-120 in sub-urban areas. These three regions saw a decline in annual rental prices in Q2 2024 compared to the previous quarter. Rental prices in Sidoarjo Regency decreased by 14%, reaching IDR 30 million, Bekasi Regency saw a 5% drop to IDR 35 million, and Bogor City experienced a 3% decrease, also down to IDR 35 million. Additionally, the total inventory of rental houses in these areas increased quarter-over-quarter, by 27%, 36%, and 19%, respectively. On the other hand, searches for rental houses of type 55-120 in Bogor City and Bekasi Regency also surged, with a 125% increase in Bogor and 79% in Bekasi, indicating rising interest in these areas.
Trends in Rental House Prices and Inventory in Bekasi Regency, Bogor City, and Sidoarjo Regency (Q2 2024)
For those who prefer living in city centers, East Jakarta, North Jakarta, and Surabaya offer attractive opportunities with a decrease in annual rental prices for type 55-120 houses. East Jakarta saw a price change of -7%, dropping to IDR 50 million, North Jakarta decreased by -6% to IDR 65 million, and Surabaya experienced a -5% drop to IDR 40 million.
There has also been a rise in interest in rental houses of type 55-120 in East Jakarta, North Jakarta, and Surabaya, with quarterly searches increasing by 136%, 61%, and 44%, respectively. The total rental house inventory in these cities also grew on a quarterly basis, with increases of 89%, 8%, and 21%, respectively.
Rental Apartment Searches in Jakarta Increase
Quarterly Growth (QoQ) in Rental Apartment Searches in
Jakarta
Searches for rental apartments in urban areas have shown an increase, with quarterly growth reaching 14% in DKI Jakarta. This growth is 1.8 times faster than in Greater Bekasi. Meanwhile, Greater Tangerang saw a decline of -23%, indicating a positive trend for rental apartments in urban areas compared to sub-urban areas.
About Pinhome Exclusive Report
Pinhome Exclusive Report is a report designed to present in-depth and comprehensive analysis on thematic topics that are the main focus in the property industry. Unlike quarterly market reports, which cover overall market dynamics such as supply, demand, and financing conditions over a specific period, the Pinhome Exclusive Report takes a more specific and thorough approach to key issues affecting the Indonesian property market.
The Pinhome Exclusive Report October 2024 focuses on a deep exploration of the journey of the Sandwich Generation in achieving homeownership. Recognizing that the Sandwich Generation faces significant financial burdens by supporting non-productive parents and financially dependent children, and sometimes even siblings, this report presents facts related to the challenges and efforts of this generation in acquiring housing, as well as possible solutions.
Methodology
This report is the result of collaboration between Pinhome and YouGov. The data underlying the Pinhome Exclusive Report October 2024 comes from an online survey conducted by YouGov, involving 400 respondents consisting of men and women aged 18 and above from various socioeconomic classes across Indonesia. The survey includes 200 homeowners who recently purchased within the last year and 200 prospective homebuyers planning to purchase within the next year. Additionally, this report draws from Pinhome's comprehensive database, covering over 1 million housing inventories, to provide valuable insights into current market dynamics, including popular property types, budget planning, and regional differences in housing availability and affordability.
By combining Pinhome's extensive property database with YouGov's reliable research methodology and findings, this report aims to enhance transparency and accessibility in the property market, empowering consumers, developers, and policymakers to make more informed decisions. Through data-driven analysis and actionable insights, the Pinhome Exclusive Report serves as a trusted resource for understanding the evolving landscape of homeownership in Indonesia, offering a clear roadmap for those seeking to achieve homeownership in a dynamic market.
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