Singapore Home Prices Rise at Slowest Pace in Six Quarters

Photographer: Nicky Loh/Bloomberg

A woman looks out of a balcony at Marina Bay Residences in the central business district of Singapore. Close

A woman looks out of a balcony at Marina Bay Residences in the central business district of Singapore.

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Photographer: Nicky Loh/Bloomberg

A woman looks out of a balcony at Marina Bay Residences in the central business district of Singapore.

Singapore home prices increased at the slowest pace in six quarters after the government introduced new loan measures to cool prices in Asia’s second-most expensive housing market.

The island-state’s private residential property price index rose 0.4 percent to a record 216.2 points in the three months ended Sept. 30, after it climbed 1 percent in the second quarter, according to preliminary figures released by the Urban Redevelopment Authority today. That’s the smallest gain since the first quarter of 2012, when the index dropped 0.1 percent.

Record home prices amid low interest rates raised concerns of a housing bubble and prompted the government to widen a campaign that started in 2009 to curb speculation in the property market. Singapore unveiled new rules in June governing how financial institutions grant property loans to individuals, in addition to previous curbs including new taxes and higher down-payments.

“The loan curbs are biting into the market,” said David Neubronner, national director at broker Jones Lang LaSalle Inc.’s residential project sales in Singapore. “The days of easy borrowing are over.”

The new loan framework requires that lenders take a borrower’s debt into consideration when granting mortgages, the Monetary Authority of Singapore said June 28. Home loans should not exceed a total debt-servicing ratio of 60 percent and those that do will be considered imprudent, it said.

Photographer: Nicky Loh/Bloomberg

Residential buildings stand in the Grange Road area of Singapore. Close

Residential buildings stand in the Grange Road area of Singapore.

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Photographer: Nicky Loh/Bloomberg

Residential buildings stand in the Grange Road area of Singapore.

Loan Growth

The gain in housing and bridge loans slowed to 13.5 percent in August compared with a year earlier, the slowest increase in almost four years, according to data compiled by Bloomberg based on information from the central bank.

Apartment prices fell 0.5 percent in prime districts in the third quarter, more than the 0.2 percent decline in the previous three months, the URA data showed. Those in the suburbs climbed 2.1 percent, compared with the 3.8 percent increase in the previous quarter, according to the data.

The measures are also affecting public housing, where 82 percent of Singaporeans live. The resale price index for public housing fell 0.7 percent in the third quarter, the first decline since the first quarter of 2009, according to a statement from the Housing & Development Board.

Singapore’s home sales rose in August as developers marketed more projects, rebounding from July when they slumped to the lowest since December 2009. Home sales increased 54 percent to 742 units in August, compared with 482 in July, according to a separate data from the URA. Sales in August last year were 1,427 units.

The island-state is Asia’s most-expensive housing market after Hong Kong, according to a Knight Frank LLP and Citi Private Bank report last year.

“The measures are working,” said Nicholas Mak, an executive director at SLP International Property Consultants in Singapore.

To contact the reporter on this story: Pooja Thakur in Singapore at pthakur@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net

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