The index was rightly baseline as 100 in 1998 after the sharp drop due to Asia Financial Crisis (refer top chart). Subsequently, the index went north as economies recovered.
However, the new low should now be re-aligned to the period of 2008/2009 after the Global Financial Crisis triggered by the housing bubble in US and the collapse of Lehman Brothers. The new baseline would be in the region of 160 for residential properties (refer bottom chart. Note that both charts are not directly comparable but serves as a good gauge).
Given that the current residential properties index is in the region of 200, any decline back nearer the 160 area would be a good buy. It also means that the current down side is about 40 index points, roughly 20%.
Posts
