A well-functioning housing sector should continue to be a priority for the Government of Indonesia. The housing sector is a key element of sustainable urban development and is a driver of economic growth for cities. Quality housing is a fundamental component of the economic, social, physical, and psychological welfare of citizens. Housing is also the largest single purpose for which land is used in cities, and is usually the most valuable asset individuals own. Ensuring that housing maintains and increases in value is essential for families’ economic stability and prosperity. In addition, the home environment of families affects their physical and mental health significantly.
Indonesia is rapidly urbanizing. It is estimated that over the next 40 years, an average of 2.2 million people will move to urban areas each year. The proportion of Indonesia’s urban population has nearly tripled from 17% of the country’s total population in 1971 to 48% in 2005, and is expected to increase to 68% by 2025. This is a result of natural population growth, urban-rural migration and other factors. With the rapid urbanization taking place in Indonesia, housing production and the manner in which it is managed will have significant implications for socio-economic development, and greatly influence the structure of cities and metropolitan areas.