Singapore home prices rebounded to a record in the second quarter after developers sold more homes, a government report showed.
The island state’s private residential property price index rose 0.4 percent to 206.8 points in the three months ended June 30 from the previous quarter, according to preliminary estimates released by the Urban Redevelopment Authority today.
The latest recovery in prices may renew concerns on government measures to regulate the sale of smaller-sized residential units after developers sold a record number of so-called shoebox apartments in the first quarter. Home sales have climbed 54 percent to 10,880 units this year, according to data from the authority.
“The low interest rate environment and investors looking for investment opportunities to hedge against inflation is resulting in higher prices,” said Nicholas Mak, executive director at SLP International Property Consultants, a real estate consulting company. “Still, it’s too small an increase to justify an intervention by the government.”
Prices of non-landed private residential properties increased by 0.6 percent in the Core Central Region in the quarter compared with a decrease of 0.6 percent in the three months to March 31. Prices in Outside Central Region climbed at a slower pace of 0.4 percent in the quarter, compared with a gain of 1.1 percent in the previous quarter.
The Singapore property index climbed 0.5 percent to the highest in more than two months. CapitaLand Ltd., Southeast Asia’s biggest developer, increased 1.5 percent to S$2.74 as of 9:26 a.m. in Singapore trading, set for the highest since May 7. City Developments Ltd., the country’s second-largest developer, added 0.4 percent.
The increase in the sales of such homes is a concern and the government has asked developers to provide more details, Khaw Boon Wan, Singapore’s National Development Minister, said in May. Shoebox apartments are those smaller than 50 square meters (538 square feet).
Singapore has been attempting to rein in prices since 2009, when it barred interest-only loans for some housing projects and stopped allowing developers to absorb interest payments for apartments still being built. Foreigners and corporate entities have to pay an additional 10 percent stamp duty following measures introduced in December.
The extra levy is 3 percent for permanent residents purchasing a second home and for citizens buying their third residential property. The government earlier imposed a 1 percent duty on the first S$180,000 ($142,879) of the property price, 2 percent on the next S$180,000 and 3 percent for the remainder.
In January 2011, the government also raised down-payment requirements for second mortgages and extended the period homeowners must hold their properties to avoid a sales transaction tax to fend off speculators.
Still, home sales in May fell 32 percent from a month ago, posting the lowest sales this year as the Europe crisis damped demand. Private home sales fell to 1,702 units in May from this year’s peak of 2,496 units in April, according to data from the Urban Redevelopment Authority. Sales fell below 2,000 units for the first time in four months.
Developers are increasing sales by offering smaller units, according to CBRE Group Inc., the Los Angeles-based property broker. The median size of units declined 24 percent to 667 square feet in the first quarter the previous three months while the median price slid 18 percent to S$786,340, it said.