Singapore home prices climbed to a record in the third quarter after developers sold more homes, a government report showed.
The island state’s private residential property price index rose 0.5 percent to 208 points in the three months ended Sept. 30, according to preliminary estimates released by the Urban Redevelopment Authority today. The index advanced 0.4 percent in the previous quarter, which was also at a record.
Singapore in September decided to cap the number of homes that can be developed in suburban projects to curb the increasing trend of so-called shoebox apartments that are smaller in size. The government has been attempting to rein in residential property prices since 2009.
“The growth of private home prices is likely to remain moderate in the short term,” said Nicholas Mak, Singapore-based executive director at SLP International Property Consultants, a real estate consulting company. Mak estimates the home price index will rise by 1 percent to 3 percent this year.
The government plans to limit the number of homes for apartment projects outside the city’s central area to discourage shoebox units, the authority said in a statement on its website on Sept. 4. The new rules will be implemented from Nov. 4.
Purchases made by Singaporeans increased to 35 percent of the total this year from 19 percent in 2011, almost on par with foreigners, DTZ Holdings Plc said, citing authority data. The number of home purchases made by Singaporeans this year has exceeded that for the whole of 2011, suggesting there is underlying demand from cash-rich local buyers who have been waiting for more attractive pricing, DTZ said.
“Buyers, both foreigners and locals, are slowly coming back,” Margaret Thean, executive director at DTZ’s residential business in Singapore, said before the figures were released. “We expect to see more activity and interest in luxury housing in the next one to two quarters with a few projects gearing up for launch.”
Prices of non-landed private residential properties increased 0.2 percent in the prime districts in the quarter, moderating from 0.6 percent in the previous three months, today’s data showed. In suburban areas, prices climbed 1 percent, compared with 0.5 percent in the previous quarter.
The Singapore property index, tracking 16 real estate companies, fell 0.2 percent at the close of trading in Singapore. CapitaLand Ltd., Southeast Asia’s biggest developer, declined 0.3 percent, while City Developments Ltd., the country’s second-largest developer, lost 0.7 percent.
Singapore in 2009 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 ($146,000) of the property price, 2 percent on the next S$180,000 and 3 percent for the remainder.
Home sales in August fell 27 percent from a month ago, as developers marketed fewer projects in a month considered inauspicious based on the Chinese Lunar calendar, according to the authority last month. The island state’s private residential property sales fell to 1,421 units from 1,946 apartments in July, according to the data.