On the FTSE Straits Times Real Estate Index, the breakdown has not happened yet but has a nicely formed bearish wedge price structure. The price satisfaction has already been achieved and the large bearish wedge is awaiting the break down. A capture above the trendline resistance formed by R1, R2, R3, R4 and R5 will negate a potential property bear caused by the bearish wedge formation. However, anything above the trendline resistance formed by R1 to R5 is also where the Big Hands and market will deliberately create an over-value zone for distributional selling. The long term bearish structure should break down soon since it is approaching the 2/3 point and that Donovan Singapore Property Market Composite Index had already broken down. At the trendline support caused by S1 and S2, the government should try to cushion the property corrections, otherwise there would be a prolonged downwards movement.
From Donovan Analysis as above, contrary to the popular belief that there is a housing bubble in Singapore, in actual fact, there is no bubble. There is no bubble in part due to perhaps the good preventive measures and cooling measures implemented by the Singapore government; hence, any property fall will not have too nasty an impact to the Singapore economy. In such a case, the Singapore Banking Sector will not be hurt too badly as there were no bubbles that could result in loan assets turning toxic.
However, within 1-2 year's time, we should see the price structures reflected by the financial market (Donovan Singapore Property Market Composite Index and FTSE Straits Times Real Estate Index) get translated in the physical property market, i.e. one of which prices of physical property start significant correction mode. Expect COE and COV to drop in the same timeframe too.
Precautions needed; watch out, as Singapore Property Market is to peak in 2012.