Singapore private home prices rose less than estimated and rents edged down in the second quarter, following government efforts to tame the real estate boom.

Private residence valuations increased by 0.9% from the previous three months, according to final data released by the city’s Urban Redevelopment Authority on Friday. That’s less than an earlier estimate of 1.1%, and a 1.4% rise for the first quarter.

Private rents, a bugbear for both residents and expats, fell 0.8%, compared with a 1.9% drop in the previous quarter. That marks a third consecutive quarter of declines, although they remain elevated after rising more than 50% in the previous four years.

The resilience reflects continued local spending power, despite authorities’ effort to cool a housing market that’s made the financial hub one of the most expensive cities in the world. Among policies issued include a 60% stamp duty on foreigner property purchases.

Home prices have now risen for four straight quarters, posing a challenge to the country’s ruling party and new Prime Minister Lawrence Wong. His government needs to grapple with voter concerns about housing affordability, ahead of an election that must be called before the end of 2025.

“Price growth is moderating”, but factors including healthy household balance sheets and families that want to upgrade their homes could support demand, said Bloomberg Intelligence analyst Ken Foong. 

Foong has raised his forecast for prices to rise by as much as 4% this year, compared with a 'flattish' estimate earlier. He expects home prices to increase by about 1.5% in the second half.

Second-hand home transactions have helped drive much of the growth in prices, while new home sales slowed. In the first half, developers sold 1,889 units - the least number of homes in at least two decades.

Authorities have shown little inkling to ease cooling measures, although they have downplayed the need for more. Central bank chief Chia Der Jiun said at a recent press conference that it doesn’t “see the need to move” on more measures, as there aren’t signs of overexposure to real estate in the banking sector.

  - Bloomberg