Developers brace for protracted residential property downcycle

Cooling measures won’t be eased anytime soon.

The bottom is a long way away for the residential property market downcycle, with the home price index down only 4% from its peak and developers unwilling to budge in the pricing war.

According to BNP Paribas, if home prices don’t fall more quickly, policy relaxation could be delayed and the bottoming-out process for the residential market could be a protracted one.

“Our analysis of the past three down-cycles (1998 to 2009) suggests policy easing will happen when home prices fall c15%. We forecast a 10-15% decline in home prices over 2014-16. The current stalemate and absence of catalysts could cap developers’ share performances in the short term, in our view,” stated the report.