Singapore’s jump in private home sales last month was only a temporary reprieve for developers as the government’s cooling measures take root and mortgage rates begin to rise.
The city’s housing sales climbed 54 percent to 742 in August from July, when they fell to 482, the lowest in almost four years, according to government data. With nine rounds of cooling measures since mid-2009, the increase will be short-lived, according to Mizuho Bank Ltd. and UOB Kay Hian Pte. Monthly sales averaged about 1,700 units in the first six months of the year.
“There have been successive rounds of measures coming through and with mortgage rates also beginning to move up, you will find that buyers are becoming more circumspect and wondering if these are the right entry levels,” said Vishnu Varathan, a Singapore-based economist at Mizuho, who forecast home prices to fall 10 percent to 15 percent by 2016.
Singapore unveiled new rules in June governing how financial institutions grant property loans to individuals. Record home prices amid low interest rates raised concerns of a housing bubble and prompted the government to widen a more than four-year campaign to curb speculation in Asia’s second-most expensive housing market, according to a Knight Frank LLP and Citi Private Bank report.
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