Property Counter Under Attack
The new measures announced by the Singapore Government to curb speculation in the property market caused property counters to react negatively on Friday. With effect from 14 Jan 2011, property owners will need to fork out 16%, 12%, 8% and 4% if they choose to sell their property within the first, second, third and fourth year respectively. Assuming that a property speculator wants to cash out within the first year of purchase, the property value needs to go up by around 20% in order for the trade to be profitable.
Property counters voted with their feet down. Most of them gap down at the open with higher than normal volume.
In terms of candlestick pattern, Wing Tai and City Dev fared better as both managed to close above their opening price. If the price is above to go above the high made on Friday, there may be a chance to get a quick profit as the gap starts to be filled. But with such negative sentiment in the market, it is unlikely that any rally in property counter is sustainable. The best the bulls can hope for is for the counters to hold on to their support level which is looking increasingly dangerous.