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Housing loans grow along with the property market

+ Article on Marketing Magazine

Marketing Magazine
July 2007

Housing loans grow along with the property market

The property business is booming in Asia. And in Indonesia, the number of people applying for housing loans is increasing each day, as the study conducted by Spire Research and Consulting indicates.

The research was carried out among 150 respondents aged 25-54 years of age in Jabodetabek. The research revealed that 55% respondents have or have had housing loan – with 20% of the respondents currently paying off the debt. A majority of the loans are provided for those in their early to mid thirties, where many are at their nesting stage of the life cycle.

There are many financial institutions that provide the housing loans service. The survey revealed that the bank of choice is BTN. This comes as no surprise as the ‘red-plated’ bank has been on the scene for many years. 54% respondents
choose housing loans from BTN rather over other banks. Bank Niaga trails behind
with a mere 10% of votes, followed by Bank Mandiri (8%), BCA (5%), and Lippo
Bank (4%).

Customers’ awareness of housing loan schemes comes not from advertising promotions but rather from direct marketing at the bank. This is indicated by 61% of the respondents who revealed their knowledge of the housing loan came from the bank staff, whilst 30% sought recommendation from relatives and 17% from friends. From this trend, banking institutions would benefit to play an active role as an information-provider to their customers.

The two main motivations that prompted respondents to pick a certain bank over others were a low interest rate and familiarity with that institution. 47% of BTN’s customers responded to the low interest rate whilst all the respondents who picked BCA as the bank of choice revealed it was because of their existing customer status. Other reasons are recommendations from the developer, family and company, respectively.

This survey also identified that there is a tendency to buy a house which is managed by an experienced developer (89%) rather than without a developer (11%). Thus, cooperation between developer and the banks would serve as a great marketing strategy. However, the developers also need to heed strategic location, competitive price and quality of the building. These considerations are shown by the survey which revealed that price (62%), location (62%), building quality (30%) and access to public and social facilities such as bus stops, hospitals and schools (10%) are crucial.

Customer satisfaction is based on four criteria: straightforward service, friendly staff, a low interest rate, and reasonable prices.

Spire sees housing loan as a banking product in high demand, especially with the property boom across Asia today. Financial institutions would do well to take heed of this trend and respond to the demands of customers.

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