The Housing Financing Policy and Its Impacts on Low-Income Communities and Indonesian Economy

Abstract

The housing financing policy or the Liquidity Facility of Housing Financing (FLPP) aims to help low-income communities (MBR) access affordable and livable housing. Unfortunately, MBR's housing backlog is still high, affecting their productivity. The housing financing policy also leverages the changes in other sectors' activities, which can increase or contract economic performance. This study aims to analyze the impact of housing financing policies on MBR's welfare and the Indonesian economy's performance. The Recursive-Dynamic Computable General Equilibrium (RDCGE) and the Econometric Model capture economic resources reallocation at MBR and macroeconomic levels due to housing financing policies. The study results indicate that the FLPP can potentially increase the growth and development of housing and improve community welfare. In addition, the FLPP positively impacts economic performance, although it will make specific sectors worse off. The policy recommendations are related to the simultaneous improvement of the demand and supply sides, as well as improvement in housing budget