(April 1): Singapore home prices rose for a third consecutive quarter, withstanding months of tepid sales and warnings from authorities about high interest rates.

Private residential prices climbed 1.5% in the first quarter from the previous three months, according to preliminary estimates released Monday by the Urban Redevelopment Authority (URA). That is slower than the 2.8% price increase recorded in the fourth quarter of 2023. Sales fell 20%.

The figures indicate underlying demand from local buyers remains steady, said Chia Siew Chuin, head of residential research for Singapore at Jones Lang LaSalle Inc. Cooling measures are unlikely in the short term, since the price gains were “supported by genuine local demand”, she said.

The financial hub has so far dodged the worst of the property downturn sweeping the globe. Local demand has buoyed the city’s real estate, despite high interest rates and a spate of government curbs in recent years to cool the market.

That’s prompted increased concern from authorities about homebuyers taking on debt under an uncertain economic outlook. The URA warned that domestic mortgage rates are expected to remain at levels that are elevated relative to those seen over the past decade.

Morgan Stanley, which predicts a 3% drop in private home prices this year, said in a note Monday that values “are near their peak”.

There are growing strains in particular segments like luxury apartments, a market that has been pummelled by a 60% stamp duty imposed on foreigner purchases last year. That’s led to developers struggling to sell units, and having to offer discounts on their projects in some instances.

Authorities are also grappling with voter concerns about housing affordability. In its annual budget in February, the government refrained from introducing major demand-inducing measures, unlike other rival hubs such as Hong Kong.

That’s most apparent in the public housing market, where the bulk of locals live. Price increases for second-hand government-built flats accelerated to 1.7% in the first quarter from 1.1% three months earlier, separate preliminary estimates showed Monday. That’s the 16th consecutive quarter of gains.

Local demand for suburban private homes has also kept prices afloat. Lentor Mansion, a condominium project in the island’s north, managed to sell about 75% of its 533 units when it launched in mid-March.

Such high take-ups though are likely one-offs, wrote Citigroup Inc analyst Brandon Lee in a March note, as a “flood of supply” of about 47 residential projects this year weighs on buying sentiment.

Finalised price changes will be released by the URA on April 26.