Private residential property prices rose 5.1 percent in the first quarter after jumping 7.4 percent in the fourth and 15.8 percent in the third, the Urban Redevelopment Authority said Thursday.
Prices have bounced back strongly after diving 25 percent in the 12 months to mid-2009 as the city-state's economy rebounds from last year's recession.
Singapore's leaders voiced concern last quarter that home values may be soaring too far, too fast, and implemented a series of measures to discourage short-term speculative investing in property.
The government in February imposed a 1 percent to 3 percent tax on residential properties sold within one year of purchase and lowered the loan-to-value limit to 80 percent from 90 percent on loans for private housing.
Officials have also pledged to release more government land this year for real estate development to help boost housing supply.
Policymakers throughout Asia have grappled with balancing low interest rates to spur economic growth and the danger that cheap credit can fuel asset bubbles. Shanghai's luxury property prices jumped 52 percent last year, Beijing soared 47 percent, and Hong Kong gained 41 percent, according to London-based property consultancy Knight Frank.
“If you put interest rates on the floor like they are in Asia, that's the kind of trouble you're going to get into,” said David Carbon, head of economic research at DBS bank in Singapore. “Property is so interest rate sensitive so you're getting the obvious reaction.” Singapore's low inflation rate - it was 0 percent last year - has helped banks keep loans attractive. UOB bank, for example, offers a 30-year mortgage with the first two years fixed at 1.88 percent and subsequent years at 3.75 percent.
The government expects inflation to quicken to as much as 3 percent this year as the economy grows up to 6.5 percent.
Analysts point to Singapore's clean and safe streets, low personal and corporate taxes and a ruling People's Action Party that has held power for the last 51 years as the foundation of a solid property market. Add to that the opening of the island's first two casino-resorts this year and property prices could soar in coming years.
“Real estate prices here should really be catching up with places like London at some point,” said Burkhard Varnholt, who helps manage $30 billion as chief investment officer for Swiss bank Sarasin. “Given the quality of life here, the business-friendly environment, the political stability - capital will continue to flow into Singapore.”
By the end of last year, Singapore prime residential property was selling at $1,500 to $2,000 per square foot - the same as Manhattan but still well behind London's $3,600 to $4,400 per square foot or the $2,000 to $2,500 per square foot in Hong Kong, Asia's most expensive property market, according Knight Frank.