Housing prices continue to rise in Singapore, prompting new curbs

Suburban values push up property index, prompting officials to bring in fresh loan curbs

PUBLISHED : Wednesday, 31 July, 2013, 12:00am
UPDATED : Wednesday, 31 July, 2013, 6:25am

Singapore home prices climbed to a record in the second quarter as gains in suburban housing values accelerated, prompting the government to implement new measures on property loans.

The island state's private residential property price index rose 1 per cent to 215.4 points in the three months ended June 30, extending a 0.6 per cent increase in the first quarter, according to revised figures released by the Urban Redevelopment Authority. The pace of gains in prices in the suburbs more than doubled from the previous three months.

With interest rates low and home prices at record highs, there are concerns a housing bubble may form. That prompted the government to widen a four- year campaign to curb speculation in Asia's second-most expensive housing market. On June 28 Singapore unveiled new rules governing how financial institutions grant property loans to individuals.

Flat prices fell 0.2 per cent in prime districts in the second quarter, compared with a 0.6 per cent gain in the previous three months. Those in the suburbs climbed 3.8 per cent, compared with the 1.4 per cent increase in the previous quarter.

Suburban demand was boosted by Singaporeans upgrading from living in apartments built by the state to private flats. About 82 per cent of Singaporeans reside in government-built flats, according to the Housing Development Board's website.

CapitaLand may alter the size of its apartments as it seeks to improve affordability to combat government measures, said Lim Ming Yan, president and chief executive officer at Singapore's biggest developer.

"We want the right sizing, put in the right layout, so our users will find it a lot more user-friendly and at the same time something they can afford," Lim said.

Singapore is Asia's most expensive housing market after Hong Kong, according to a Knight Frank 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 cost US$25,600 per square metre, the report showed.

Developers sold 4,538 homes in the second quarter, 16 per cent fewer than the previous quarter, the data showed. Private home rents increased 0.3 per cent in the quarter.

The government measures in January included an increase in the stamp duty for homebuyers of between five and seven percentage points, with permanent residents paying taxes when they buy their first home. Singaporeans will have to pay the levy starting with their second purchase.

Office prices climbed 1.5 per cent in the quarter ended June, while rents rose 0.2 per cent after declining 0.2 per cent in the first quarter, the data showed.