Boosting Homeownership Affordability for Low-Income Communities in Indonesia

Abstract

This study aims to determine the effect of inflation, regional minimum wages, and subsidized housing costs on the purchasing power of low-income communities needing to own a home as an intervening variable. This study uses the Structural Equation Modeling (SEM) method to analyze the data from the districts of East Java, Indonesia. Broadly speaking, this study found that the higher the need to own a home, the higher the purchasing power of Low-Income Communities because the population is increasing, so the need to own a place to live is also directly proportional. The practical implication of this study is that it can contribute useful information relating to the effect of inflation, regional minimum wages, and subsidized house prices on the purchasing power of low-income communities with a need to own a house as an intervening variable. Therefore, the government needs to control the impact caused by inflation in the form of rising bank interest rates by subsidizing it so that it remains stable. In the future, the government should include housing allowances in the minimum wage component. The government should not only subsidize house prices, but also production costs, so that the price of subsidized houses remains stable.