Policy support strengthened in 1H2026 through accelerated social housing approvals and emerging rental housing initiatives. However, residential demand weakened amid elevated mortgage rates and rising supply, resulting in lower presales, weaker transactions, and softer prices. Financing conditions deteriorated as bank lending and equity issuance remained subdued, increasing developers’ reliance on higher-cost bond funding. Despite strong earnings from project handovers, leverage rose to its highest level since 2022 and operating cash flow remained weak across most developers. We expect sector credit quality to weaken in 2H2026 as soft demand constrains presales and cash collections, particularly for smaller developers and those with legally delayed projects.
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