Sluggish economic growth and six rounds of property cooling measures over the past three years, yet Singapore home prices remained on the boil in 2012. That can only mean one thing, say analysts: fresh curbs to cool the housing market in the months ahead.
Private home prices in Asia's financial hub, ranked as one of the world's most expensive cities to live in, climbed 2.8 percent last year, according to flash estimates by the city's Urban Redevelopment Authority (URA), after a 1.8 percent rise in the final quarter of 2012 – the fastest pace since the second quarter of 2011.
Prices remained supported by a flow of cash into Asian markets as a result of a third round of quantitative easing by the U.S. Federal Reserve, record low interest rates and demand from local buyers looking to upgrade their homes.
"The recent [price] increase is fairly tame compared to [2009-2011], but robust when seen against the setting of what the government has done to cool the market and the poor economic environment of the local and global economy," Yang Liang Chua, Head of Research at Jones Lang LaSalle wrote in a note on Wednesday.
"We expect heightened policy measures with the government responding comprehensively to suppress any price increases that rise beyond a level of about 2-4 percent per annum," he added.
Between the third quarter of 2009 and the second quarter of 2011, property prices registered quarterly gains of between 2 and 15.8 percent, according to data from Jones Lang LaSalle. Over this period, the government rolled out a slew of measures to rein in prices, including hiking the seller's stamp duty rate.
Policymakers in the city state have since kept a close watch on the market. In October last year, the government moved to cap the amount of time granted to homebuyers to repay loans on new residential property at 35 years.
Min Chow Sai, a property analyst at Nomura agrees there is "no doubt" the latest increase in house prices has increased the possibility of further government intervention. He added that the anticipation of further policy changes may have a positive impact on home sales in the near term as buyers look to make their purchases before any new measures come in.
"The key question now facing the government is whether it makes sense to continue introducing measures that lack teeth and put its credibility further at risk, or is it time to make a thorough review of the existing policies and make bold changes accordingly?," Min said.
(Read more: If This Happens, Singapore Home Prices Will Fall)
Research head at Savills Singapore, Alan Cheong, however, disagrees that there is a large threat of fresh cooling measures in the near future.
Price increases in 2012 were largely driven by cost push pressures - as developers face higher land prices - not speculation, hence new curbs would be ineffective, Cheong said.