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 percent to 215.4 points in the three months ended June 30, extending a 0.6 percent increase in the first quarter, according to revised figures released by the Urban Redevelopment Authority today. The pace of gains in prices in the suburbs 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 to curb speculation in Asia’s second-most expensive housing market. Singapore on June 28 unveiled new rules governing how financial institutions grant property loans to individuals.
Apartment prices fell 0.2 percent in prime districts in the second quarter, compared with a 0.6 percent gain in the previous three months. Those in the suburbs climbed 3.8 percent, compared with the 1.4 percent increase in the previous quarter, according to today’s government data.
Suburban demand was boosted by Singaporeans upgrading from living in apartments built by the state to private condominiums. About 82 percent of Singaporeans reside in government-built units, according to Housing Development Board’s website.
CapitaLand Ltd. may alter the size of its apartments as it seeks to improve affordability to combat government measures, Lim Ming Yan, president and chief executive officer at Singapore’s biggest developer, said in a Bloomberg Television interview in Singapore yesterday.
“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 LLP and Citi Private Bank report released last year that compared 63 locations globally. Hong Kong homes cost an average $28,300 per square meter in 2011 compared to Singapore where an apartment would cost $25,600 per square meter, the report showed.
Developers sold 4,538 units in the second quarter, 16 percent lower than the previous quarter, the data showed. Private-home rents increased 0.3 percent in the quarter.
The government measures in January included an increase in the stamp duty for homebuyers by between 5 percentage points and 7 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 percent in the quarter ended June while rentals rose 0.2 percent, after declining 0.2 percent in the first quarter, the data showed. Prices of industrial space grew at a slower pace, climbing 0.5 percent compared with the 2.9 percent increase in the March quarter.