Singapore Home Price Growth Quickens, Stoking Worries of Curbs
(Bloomberg) -- Singapore home prices grew at a faster pace last quarter, stoking concerns that the government could join other nations that are introducing measures to calm the property market.
Private property values increased 2.9% in the three months ended March 31, preliminary figures from the Urban Redevelopment Authority showed Thursday. That’s the biggest gain since the second quarter of 2018.
Singapore’s property prices have recovered rapidly from a lockdown that lifted last June as low interest rates prompt buyers to look past a deep recession. In the past few months, the pace of gains -- from private apartments to public housing flats to luxury penthouses and bungalows -- has soared.
The frenzy is fueling concerns that Singapore may add new curbs, joining the likes of New Zealand, which last month removed tax incentives for property investors. In Canada, where the average price of a home in Toronto breached C$1 million ($795,000) for the first time in February, there have been growing calls to rein in the market.
For Singapore, speculation of another round of cooling measures -- last imposed in July 2018 -- has been building in the past few months. Authorities have warned that low rates can lead to distortions in asset prices and the property market shouldn’t run ahead of economic fundamentals.
There’s a higher risk now that the Singapore government is eyeing property curbs, said Christine Sun, senior vice president of research and analytics at OrangeTee & Tie.
“But the authorities are probably tracking closely other market indicators as well such as how the first-quarter GDP growth pans out, whether prices of properties are indeed outpacing economic recovery,” Sun said. “They may also track the volume of sales as a high volume coupled with high prices may alleviate the risk of a property bubble forming.”
Singapore home prices rose 2.1% in the previous quarter, while for the whole of 2020, values jumped by 2.2%. Back in 2018, the government tightened loan limits as well as increased tax duties for foreigners and owners purchasing second homes.
Officials may take similar steps this time around, said Ong Teck Hui, Jones Lang LaSalle Inc.’s senior director of research and consultancy based in Singapore. As price momentum picks up, there’s a higher risk of cooling measures, he said.
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