Singapore home prices climbed to a record in the second quarter as gains in suburban housing values accelerated, leading to new government measures on property loans at the end of last week.
The island state's private residential property price index rose 0.8 per cent to 214.9 points in the three months to June 30, extending a 0.6 per cent increase in the first quarter, according to preliminary estimates released by the Urban Redevelopment Authority. The pace of gain in suburban home prices more than doubled from the previous three months.
Record home prices amid low interest rates raised concerns of a housing bubble and prompted the government to widen a four- year campaign in January to curb speculation prices in Asia's second-most expensive housing market. Singapore on June 28 unveiled new rules governing how financial institutions grant property loans to individuals, extending efforts to curb excessive price increases.
"In the immediate-term, there could be some negative impact on property sales as buyers and banks alike take time to digest how the new framework impacts them," analysts Desmond Ch'ng and Wilson Liew at Maybank Kim Eng Securities said in a note to clients. "We maintain our view that the mass market residential segment is the most vulnerable to downside price pressure."
The analysts said in the report that they prefer so-called diversified and retail developers.
Apartment prices fell 0.2 per cent in prime districts in the second quarter, compared to a 0.4 per cent gain in the previous three months. Those in the suburbs climbed 3 per cent, compared to the 1.4 per cent increase in the previous quarter, according to the government data.
Singapore is Asia's most-expensive housing market after Hong Kong, according to a Knight Frank LLP and Citi Private Bank report released last year that compared 63 locations globally.
Hong Kong homes cost an average US$28,300 per square metre in 2011 compared to Singapore where an apartment would cost US$25,600 per square metre, the report showed.
A report by the National University of Singapore's Institute of Real Estate Studies showed the NUS-Singapore Residential Property Index fell 0.2 per cent in May from the previous month. Those in the country's central region rose 1.5 per cent.