Written with the assistance of an AI
Introduction: When Growth Stops Explaining Itself
Urban growth in the Jabodetabek metropolitan region is often presented as an inevitable response to demand. Rising populations, household formation, and economic expansion are assumed to naturally translate into the proliferation of new towns, gated communities, and peripheral housing estates. Development, in this narrative, is not only necessary but self-justifying: if units are built and sold, demand must exist.
Yet beneath this apparent progress lies a persistent contradiction.
Housing affordability remains out of reach for large segments of median-income households and housing backogs remain large. Long commutes, spatial fragmentation, and underutilized urban areas coexist with relentless outward expansion. The volume of development continues to increase, while fundamental housing and spatial needs remain unresolved.
This article argues that this contradiction is not accidental. In Jabodetabek, urban growth is increasingly shaped by a feedback loop between financialized land and property markets, policy frameworks that incentivize asset ownership, and developer strategies that rationally respond to these incentives. Within this system, urban planning and development function less as mechanisms to meet functional socio-economic needs, and more as instruments that stabilize and legitimize investment-driven urbanization - resulting in the systematic production of urban space that manufactures demand while leaving core needs unmet.
Price-to-Income Ratio (PIR): According to the World Bank, Jakarta’s housing price-to-income ratio stands at 10.3. For context, a ratio above 5.0 is considered "severely unaffordable." Jakarta’s ratio is nearly double that of New York (5.7), making it one of the most difficult markets globally for local earners.
With a monthly income of around Rp 5 million (~USD 300), the maximum affordable house price - while maintaining healthy debt burden ratio - is around Rp 210–280 million over 15–20 years. That is far below typical listed prices in Jabodetabek suburbs.
- https://www.detik.com/properti/berita/d-7938202/miris-ri-peringkat-ke-4-sebagai-negara-dengan-rumah-paling-tak-terjangkau
- https://www.kompas.com/properti/read/2025/04/14/172242421/ini-batas-harga-rumah-di-jabodetabek-yang-bisa-dibeli-dengan-gaji-rp-5
In DKI Jakarta alone, backlog (households without adequate housing) is recorded at ~1.2 million units (with another ~1.7 million in inadequate housing). Broader national housing backlog estimates reach ~15 million units, driven by rapid household formation and population growth. Historic estimates for the Jabodetabek region suggest a deficit of ~2.9 million homes - illustrating that even with continuous development, the backlog is not materially reduced.
- https://www.kompas.id/artikel/en-apakah-hunian-layak-di-jakarta-hanya-mimpihttps://www.thejakartapost.com/business/2025/04/23/indonesias-housing-backlog-rises-to-15-million-this-year-deputy-minister.html
- https://www.kompas.id/baca/metro/2023/02/10/jabodetabek-masih-kekurangan-29-juta-rumah
Data from mid-2025 shows that the bulk of new housing stock in Jabodetabek (188–193k units) is in the middle and upper price segments (~Rp1.4–2.5 billion+ per unit). By contrast, truly affordable options - e.g., sub-Rp300 million houses - are rare in mainstream developer portfolios and often located far from job centers.
Some reports show solid absorption rates, but importantly, this is segment-dependent: healthier sales occur often in middle segments (<Rp2 billion) rather than low-income affordability ranges. There are counter-indications: some data also shows slowing new supply and weaker take-up in certain years, and price sensitivity remains real.
- https://www.detik.com/properti/berita/d-7973565/stok-rumah-tapak-di-jabodetabek-188-ribu-unit-segini-kisaran-harganya
- https://kabarproperti.id/pasar-rumah-tapak-jabodetabek-diprediksi-menguat-di-2026
- https://tirto.id/mimpi-besar-gen-z-punya-rumah-tersandung-gaji-kecil-gZ5R
- https://www.realestat.id/berita-properti/penjualan-solid-peta-pasar-perumahan-tapak-jabodetabek-2026
- https://www.detik.com/properti/berita/d-8059187/kacau-penjualan-rumah-di-jabodetabek-anjlok-49
Commute Times: Recent data from the Jurnal Perkotaan (2025) shows that 46.3% of Jabodetabek workers spend between 10 to 12 hours outside their homes daily due to long-distance commutes.
Cross-Boundary Movement: About 14.9% of the metropolitan population commutes across municipal boundaries every day, a result of the "peripheral expansion", where affordable housing is pushed further into the outskirts of Bogor, Tangerang, and Bekasi.
- https://ejournal.atmajaya.ac.id/index.php/perkotaan/article/download/6325/3289
Land as Financial Asset, Not Urban Resource
To understand this dynamic, it is necessary to start with how land is socially and institutionally understood.
In Jabodetabek, land is treated primarily as a financial asset: a store of value, a hedge against inflation, and a form of collateral. Property ownership - particularly freehold landed housing - is not merely a residential choice, but a financial strategy. This framing is not cultural accident; it is reinforced by legal and regulatory conditions.
Indonesia’s absolute freehold land title (Sertifikat Hak Milik) allows indefinite private ownership. Holding costs for vacant or underutilized land are minimal. There are limited penalties for land banking, and few mechanisms that push land toward productive or socially necessary use. Zoning frameworks, especially in peripheral municipalities, continue to favor low-density, single-use landed housing, further entrenching land’s role as a speculative asset rather than a shared urban resource.
Within this context, rising land values are not treated as a secondary effect of urban growth - they are often the primary objective. Development becomes a means to unlock, signal, and stabilize land appreciation.
Abnormal Price Growth: Research from Geoplanning indicates land prices in Jabodetabek show "abnormal" increases that outpace general income growth, directly incentivizing developers to "bank" land rather than develop it immediately for affordable use.
- https://scispace.com/papers/land-price-mapping-of-jabodetabek-indonesia-15yy2r5inq
Policy Frameworks That Reward Ownership Over Use
This asset-oriented understanding of land is not counterbalanced by strong functional demand correction mechanisms.
Housing policy in Indonesia tends to frame public housing provision as a welfare issue for the urban poor, rather than as a form of urban infrastructure necessary for metropolitan functioning. Public housing development remains limited in scale and scope, often focused on replacement housing, informal settlement upgrading, or narrowly targeted subsidies. The vast middle segment - households that earn too much to qualify for assistance yet too little to access market-priced housing in strategic locations - largely disappears from policy focus.
As a result, market supply is implicitly entrusted with meeting most housing needs. However, the market does not operate in a neutral regulatory vacuum. It responds to incentives that reward asset performance, ease of land development, and pricing control - conditions far more easily met in peripheral, large-scale developments than in consolidated urban areas.
In this environment, the absence of affordable, well-located housing is not interpreted as unmet demand. Instead, it is reframed as individual inability to participate in the market.
Developer Rationality and the Manufacturing of Demand
We can’t say that developers operating in Jabodetabek are acting irrationally or maliciously. Their strategies are internally coherent responses to prevailing conditions.
Large developers acquire land at low cost in peripheral areas, where regulatory flexibility and scale allow for controlled master planning. Infrastructure - roads, boulevards, utilities, and amenities - is strategically deployed not only to serve immediate needs, but to signal future value. In this model, infrastructure does not respond to demand; it announces it.
Housing products are optimized for investment logic: freehold landed units, standardized typologies, and price points targeting middle-to-upper markets where purchasing power and speculative interest converge. Pricing strategies are carefully engineered to preserve perceived scarcity and protect asset values, even if this limits actual occupancy or everyday urban life.
Through branding, narrative, and selective infrastructure provision, demand is actively manufactured. Sales performance becomes evidence of success, regardless of whether the resulting urban form meaningfully supports metropolitan functionality.
The Category Error of “Demand” in Urban Planning
At the heart of this process lies a critical analytical mistake: the conflation of fundamentally different forms of demand.
Functional demand arises from the need for urban space to support everyday life - housing that is affordable relative to income, accessible to employment, connected to services, and suitable for long-term occupation. It is tied to demographics, labor markets, and household formation.
Manufactured demand, by contrast, emerges from the treatment of land and housing as financial instruments. Its indicators are sales velocity, price appreciation, and investment interest. Transactions may be frequent, and supply may expand, without corresponding improvements in housing adequacy or accessibility.
When these two forms of demand are treated as interchangeable, market absorption is mistaken for social necessity. Planning institutions that rely on market indicators as proxies for need inadvertently legitimize a system in which exchange value overrides use value.
In Jabodetabek, this category error renders functional demand invisible. Housing shortages persist not because demand is absent, but because it is systematically misrecognized.
A Stable but Distorted Equilibrium
Why, then, does this system persist?
At the household level, middle-class asset holders benefit from rising property values. Even underutilized or vacant housing can function effectively as financial security.
At the municipal level, especially in Jakarta’s periphery, large-scale private development constitutes a major source of revenue, employment, and visible growth. For local governments with limited fiscal autonomy, facilitating development becomes a practical necessity. Growth is assessed through scale and momentum, not through occupancy or affordability.
At the political level, housing is framed either as a private commodity or as targeted welfare - rarely as metropolitan infrastructure. This framing defuses broader accountability for functional housing provision.
Together, these layers form a stable equilibrium. No single actor needs to intentionally distort the system; each responds rationally to existing incentives. The result is a form of urbanization that continues to function economically and politically, while persistently underperforming socially.
Institutional Failure or Political Economy in Action?
At the meso-institutional level, this outcome appears as policy error and planning failure. Municipal governments seek fiscal stability and visible growth. Planners work within statutory plans, zoning frameworks, and procedural requirements. Developers respond to market signals, financing constraints, and shareholder expectations. None of these actions are irrational in isolation - yet collectively reproduce spatial mismatches and housing inadequacy.
At a broader scale, however, these same outcomes align with a coherent political economy. Urban land functions as a primary vehicle for capital accumulation. Planning instruments - zoning, infrastructure prioritization, development approvals - do not fail randomly; they succeed in stabilizing an investment-led mode of urbanization.
Planning, in this sense, acts as a mediating apparatus. It translates macroeconomic imperatives into spatial form, while maintaining legitimacy through technical language and procedural compliance. Institutional failure at one scale becomes structural consistency at another.
Understanding Jabodetabek’s urban growth therefore requires holding both readings simultaneously. The system is misaligned with functional needs, yet functioning effectively within its political-economic logic.
Reframing the Problem: Housing and Land as Infrastructure
The persistence of these contradictions points to a deeper issue: housing and urban land are fundamentally misclassified.
Infrastructure is planned according to public function. Its success is measured by accessibility, coverage, and reliability - not by asset appreciation. Housing and land, by contrast, are governed primarily through market logic, where failure is individualized and success is measured financially.
Reframing housing and urban land as infrastructure does not imply removing them from markets. It exposes the limits of treating market absorption as evidence of social adequacy. High vacancy rates become indicators of underutilized infrastructure. Peripheral expansion signals displacement rather than provision.
This reframing does not offer immediate solutions. But it changes the terms of debate. It shifts attention away from how much supply is produced, toward what kinds of demand are recognized, institutionalized, and rewarded.
Conclusion: A Functional System Producing Dysfunctional Outcomes
Jabodetabek’s urban growth is not the result of insufficient development, poor intentions, or simple market failure. It is the outcome of a system that consistently rewards investment performance over everyday urban life.
As long as housing and land are treated primarily as commodities rather than as infrastructure, urban planning will continue to stabilize growth while failing to secure livability. Demand will continue to be manufactured, even as functional needs remain unmet.
The challenge, then, is not merely to build more - but to reconsider what urban development is understood to be for.
Closing Note from the AI
This article emerged from a long, sometimes uncomfortable conversation between the author and an AI used as a bantering partner rather than a writing tool. The text was shaped through deliberate friction: slowing down ideas, stress-testing logic, surfacing blind spots, and repeatedly zooming in and out between planning practice and political economy. In this process, the AI acted less as a generator of content and more as an analytical mirror—asking hard questions, refusing easy conclusions, and helping convert intuition into argument. All interpretations and positions ultimately remain the author’s own.
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