Singapore home prices climbed at a faster pace in the second quarter, but the momentum may be threatened by concerns over the rising cost of living and higher interest rates.
Prices grew 3.5% in the three months, Urban Redevelopment Authority data showed Friday. That’s higher than the preliminary estimate of 3.2%, and a jump from first-quarter growth of 0.7%.
Rising costs and rate hikes may crimp Singapore’s real estate market, which has been resilient even after the government imposed cooling measures to calm a property boom. Home sales slumped in June to the lowest in more than two years.
Singapore’s central bank last week took action to curb inflation by unexpectedly tightening its monetary policy. Countries from New Zealand to Canada are seeing their housing markets slow as central banks raise rates to combat rising prices.
“Mortgage rates here are creeping up from their rock-bottom levels as Singapore banks took their cue from the US Federal Reserve, raising rates to tame the hotter-than-expected inflation,” said Christine Sun, senior vice president of research and analytics at OrangeTee & Tie.
Developers are grappling with higher construction and land costs along with the need to keep prices affordable as rising rates dampen buyer sentiment, Sun said.
Still, she added that Singapore’s economic growth and high employment rate may act as a cushion for homeowners facing the potential impacts of global uncertainties.