Bulls and bears

Bulls and bears.

Once again, we are back to this debate of whether the uptrend in the property market will continue.

Let's take a look at a traditional barometer of predicting market directions on this chart here.

Since 1999 (and perhaps even long before), the STI has always led the way in market exuberances or depressions. The PPI, on the other hand, will follow closely behind, mimicking the rises and falls of the STI, although with a substantial and consistent time lag of approximately 6 months.

Then a change occurred. The trends seemed to have reversed.

In present times, the STI has been rather stagnant since 2009Q3 at the 2475 – 2970 level, while the PPI seemed to have rebounded prematurely and continued to rise way ahead even though the STI has stopped rising.

Now, the PPI is almost back at 2007 levels (or already exceeded as some people believe), where the STI was sustained at high levels of 3465 – 3960 for a whole quarter.

Is there something we are missing here?

Both indexes appear to have reached a certain resistance level. For the STI, it seems there is difficulty breaching the 3000 mark. While for the PPI, it seems price increases have slowed significantly, with foreseeable difficulty in sustaining a level above the 2007 peak if the recovery is generally slow and no especially good news expected.

I guess its too early now to make a justified assessment. Like I said, April will be an interesting month – lets see if the major infrastructure works like the CCL and MBS can and will make a difference.

$10 million in 6 years

Wonder why people spend tens of million buying GCBs? Don't ask me - I don't own any.

But these transactions' histories just make you wonder why didn't you take that small gamble back in 2004 (I am not even talking about long-drawn historical prices in the 70s or 80s). The best part is, everyone agrees incomes have not changed much in 6 years. Well, if they haven't changed much, most people who can afford 4 million now should be able to afford 4 million 6 years ago right? The only problem would be the 20% downpayment.

If only we had taken that gamble...

Trasaction 1:

SWETTENHAM RD
15,149SQFT FREEHOLD
FEB 2010 $17,000,000
$1,122PSF RESALE

History:

SWETTENHAM RD
15,149SQFT FREEHOLD
AUG 2004 $4,640,000
$306PSF U/C

Transaction 2:

BINJAI PARK
34,586SQFT FREEHOLD
JAN 2010 $28,000,000
$810PSF RESALE

History:

BINJAI PARK
34,586SQFT FREEHOLD
DEC 2003 $9,000,000
$260PSF U/C

Well... just imagine... 4 million Singapore dollars and you are a GCB owner, barely 6 years ago. And.. in the event that you are bored of it just after 6 years - just flip it for a mere (read: awesome) 10 million profit.

Yeah right... I guess I'll just go on with my daydreaming...