A Millennial's Guide to Buying A Home

Once you hit your early thirties, after you had enough fun under the financial safety net of your parent's roof, you probably want to buy a home. With low salaries and the high cost of buying a home, it's easy to see why it feels impossible to have a place of your own without a fat bank account or rich parents.

Gary is a 30 year old graphic designer who works in Jakarta but lives in nearby Tangerang. He always wanted to own a home, but he thinks "in five years, the rising cost of homeownership and stagnant wages won't work. I tried to get a house in Bumi Serpong Damai [South Tangerang] and the prices seemed crazy, the idea of living in Jakarta is delusional with my current salary."

To even start dreaming of owning a home, you need to work in a big city like Jakarta, where salaries can easily go above the national average of Rp 3.35 million ($249) a month. You'll get a good salary in Jakarta, but that's only if you manage to claw your way past the other 605,304 job hunters in Jakarta last year.

Once (If) you actually get employed, you probably have to work a half a decade; completely forgo the concept of overtime and a fair wage in order to reach a point where your income is anywhere near comfortable, this is when you can finally start saving for a home.

According to the Central Statistics Agency (BPS), the average monthly income of an urban dwelling millennial between the ages of 25-29 after tax is Rp 2.4 million ($179) for most occupations. If you want to make a lot of money, the highest earners are in the mining industry at an average monthly salary of Rp 5.1 million ($381), but you probably knew that already.

Figuring how much people actually make in Indonesia is hard, even the government has no idea how much people make, real salaries in practice are a bit higher. You can probably assume you'll make a comfortable salary of about Rp 6 million ($448) a month in most office jobs in Jakarta.

"While the growth rate for average income has been slow, property prices are skyrocketing," says Anton Sitorus of Director Head of Research and Consultancy at Savills Indonesia. "During the real estate boom from 2011-2013, property values grew 20-30 percent, some even reported up 40 percent growth, while wages only rose 7 percent if you take inflation into account."

Sitorus said the problem lies in the disorganized national economy. Unregulated increase in land value has allowed private developers to hike property prices, creating a high barrier to entry for potential homeowners.

Let's break down the price of a small house, around 45 square meters, somewhere in the suburbs of any major city. A house like this costs about Rp 400-500 million ($29,000-$44,000), in order to finance this purchase a bank would require you to pay 30 percent of your monthly salary over 10 years, meaning you would need a job that pays at least Rp 9.5 million ($710) a month in order to manage the cost of living in a city to maintain a higher paying job.

Last month, the Coordinating Minister of the Economy, Darmin Narsution, expressed concern that in the next few years millennials won't be able to afford a home. The government has tried to step in and alleviate the housing crisis in big cities. The One Million Houses initiative, championed by President Joko Widodo, wants to build almost a million houses throughout Indonesia for low income tenants.

The looming affordable housing crisis has become a political lighting rod. During the Jakarta gubernatorial election, affordable housing was a huge issue. Many citizens displaced by evictions are still waiting for fair compensation for being evicted by the government. Candidates promoted programs to help drop property values, like an idea to offer homes with a 0 percent down payment, eerily similar to what caused the global real estate collapse of 2008.

For Sitorus, the authority involved in land taxation needs to step in before this becomes a major crisis. A tax on unused land has been proposed, but is yet to be rolled out. Soaring prices have turned into a game for land speculators, and without careful policing, this could have dire consequences for anyone who wants a place they can call their own.