THE INFLUENCE OF GDP, INTEREST RATE, WAGE, INFLATION AND EXCHANGE RATE ON RESIDENTIAL PROPERTY PRICE IN INDONESIA
Over the past years, Indonesia’s economic growth has been recorded among the top developing countries. The economic growth is believed to contribute to the increase on residential property prices. The main objective of this study is to analyse the influence of determinants of residential property prices in Indonesia by examining the dynamic relationships of residential property prices reflected through the Residential Property Price Index (RPPI) with Gross Domestic Product (GDP), investment interest rates, wages, inflation and the exchange rate against the US dollar using secondary data over a period of thirteen-years between 2002Q1 and 2014Q4. By applying the Engle-Granger co-integration testand the error correction model, this research aims to see the relationship between the variables both in the short- and long-term. The results of the study indicated that macroeconomic factors that were significantly related to Indonesian residential property prices were GDP, wages, inflation, and exchange rates against the US dollar, while the investment interest rate was not included in these factors. Furthermore, based on the results of the regression analysis on research data, government policy in setting minimum wage standards has the greatest impact on residential property prices in the property sector in Indonesia. Thus, the results of this research are expected to provide the government with better viewpoints that will assist them in enacting better policies in the residential property sector.