Singapore Home Prices Rise Even After Additional Curbs

(Bloomberg) -- Singapore private home prices are still inching higher -- albeit at the slowest pace in five quarters -- even after the government imposed additional property curbs to avoid the risk of a sharp correction that could be destabilizing to the city-state’s economy.

An index tracking private residential prices increased 0.5 percent in the three months ended Sept. 30 compared to a 3.4 percent advance in the June quarter, according to a flash estimate from the Urban Redevelopment Authority on Monday. That adds to a 9.1 percent gain in the year through June.

Key Insights

  • Apartment prices in prime districts rose 1.2 percent last quarter compared to a 0.9 percent gain in three month through June 30. Unit prices in suburban areas added 0.1 percent after climbing 3 percent in the previous quarter. Prices near prime areas slid 0.8 percent after gaining 5.6 percent in the June quarter, the data show.
  • Singapore took renewed steps in July to cool the island’s property market after a steep rise in home prices in the first six months. The rush of transactions was fueled by aggressive land bids from developers and so-called en-bloc transactions, which is where a group of owners band together to sell entire apartment buildings.
  • Under the new rules, individuals taking out their first housing loan face stricter borrowing limits, meaning they have to stump up more cash upfront. For foreign purchasers of residential property, the additional buyer’s stamp duty was increased to 20 percent from 15 percent. For Singapore citizens, the extra charges only apply from their second home purchase.
Singapore Home Prices Rise Even After Additional Curbs

Digging Deeper

  • Prices aren’t rising everywhere in Singapore’s property market. In Sentosa Cove, a residential enclave nestled on an island off the coast, average prices are down almost 30 percent from their 2011 highs, a far more severe slump than in prime central London areas reeling from Brexit.
  • As developer stocks sink, investors are turning toward real estate investment trusts, or the businesses that hold the real-estate assets rather than the ones that sell them. The FTSE Straits Times Real REIT Index is outperforming a benchmark that tracks home builders.

©2018 Bloomberg L.P.