(Bloomberg) -- Singapore private home prices surged the most since 2010 as the property market staged a recovery from a four-year slump.
An index tracking private residential prices jumped 3.1 percent in the three months ended March 31, according to a flash estimate from the Urban Redevelopment Authority, building on a 0.8 percent gain the previous quarter. That’s the biggest quarter-on-quarter gain since the three months ended June 2010.
Home prices have rebounded in the past three quarters, prompting aggressive land bids from developers as the property market shrugged off cooling measures ranging from additional taxes to limits on loans. The government in February raised taxes on home purchases exceeding S$1 million ($764,000) as the collective apartment sales market reached levels described as exuberant by the central bank.
"There’s no denial we’re entering an escalating market in light of higher land prices," said Desmond Sim, head of research for Singapore and Southeast Asia at CBRE, who had forecast a 5 percent to 6 percent increase in home prices for 2018.
Share prices of the city’s largest real estate developers led gains on the benchmark Straits Times Index. City Developments Ltd., controlled by billionaire Kwek Leng Beng, climbed 1.5 percent to S$13.20, the highest in more than a week. CapitaLand Ltd., Southeast Asia’s biggest developer, rose 1.4 percent to S$3.62, the most since March 6.
Singapore’s so-called core central region drove the price increase, where housing values climbed 5 percent in the area that includes prime residential districts. That’s pushed by a handful of developments such as GuocoLand Ltd.’s Martin Modern, according to CBRE.
With 90 percent of new residential properties sold in 2017 at below S$2 million, that means home buyers may opt for smaller units to keep to their budgets as home values rise, Sim said. If the majority of transactions move up to S$2.5 million, demand could ease, he added.
Foreign buyers from Mainland China, Hong Kong, Korea and Taiwan accounted for the bulk of demand in the core central region, according to real estate consultancy Edmund Tie & Co.
©2018 Bloomberg L.P.