Property-Price Determinants in Indonesia

Price formation provides critical insights into the attributes of fledgling property markets in developing countries. This article investigates asking-price formation across the Indonesian archipelago, including previously unstudied regional property markets. We compile a rich micro dataset of asking prices for residential, commercial, and undeveloped land from a nationwide classifieds database. Through a hedonic price analysis we identify the impact of property and advertisement attributes on asking prices for each type of property, using spatial fixed effects to control for spatially correlated unobservable characteristics at the district and city levels. Results indicate that property characteristics, land ownership status, and advertising method are all statistically significant indicators of asking price. We find considerable heterogeneity in asking-price formation in residential, commercial, and undeveloped land, and identify key differences between urban and rural markets.