Demographic Transition, Economic Crisis and the Housing Deficit in Indonesia

25 Pages Posted: 29 Jan 2012

See all articles by Paavo Monkkonen

Paavo Monkkonen

University of California, Los Angeles (UCLA)

Date Written: January 25, 2012


The idea of a housing deficit is a common, seemingly objective frame for housing policies. A deficit of between 3 and 8 million units in Indonesia has become a concern for the government in recent years. The wide range of estimates demonstrates not only that the methods used to estimate housing need are inconsistent, but also that the meaning of the term housing deficit is little understood. Insufficient housing supply is generally blamed for the supposed deficit, and policies to stimulate housing production have been considered in response. This paper analyzes household formation trends in urban Indonesia from 1990 to 2007 and estimates the quantitative housing deficit based on trends. The analysis finds that an abrupt change in the rate of household formation and household size occurred in Indonesia around the year 2000, suggesting that beyond macro trends in the country’s demographic transition and urbanization, the economic and political upheavals in the last years of the 20th century affected household formation significantly. Yet, analysis of household formation over different socioeconomic groups and urban areas shows that housing markets do also matter.

Keywords: Housing Deficit, Household Formation, Economic Crisis, Demographic Transition, Indonesia

JEL Classification: J11, O18, O53, R23

Suggested Citation

Monkkonen, Paavo, Demographic Transition, Economic Crisis and the Housing Deficit in Indonesia (January 25, 2012). Available at SSRN: or

Paavo Monkkonen (Contact Author)

University of California, Los Angeles (UCLA) ( email )

405 Hilgard Avenue
Box 951361
Los Angeles, CA 90095
United States

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