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Are Singapore home prices about to ease, finally ?

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Has Singapore's government finally pulled the right plug on the home price surges bedeviling the city-state?

The government late Tuesday issued another round of cooling measures for its real estate sector, this time targeting the subsidized public housing market – known as Housing Development Board (HDB) apartments – which house 80 percent of the country's citizens.

The measures include shortening the maximum loan tenure to 25 years from 30 years, and reducing the mortgage ratio limit against the borrower's salary to 30 percent from 35 percent previously.

Permanent residents (PR), who account for about 20 percent of the HDB secondary market and aren't allowed to buy flats directly from the government, must also now also wait three years after receiving PR status to purchase a resale subsidized property. There was no wait prior to Tuesday's new ruling.

(Read more: Taper terror may leave Singapore property unscathed)

The city state has been struggling to keep in check soaring property prices – a major issue of discontent – which have surged around 60 percent in the past three years, no thanks to a global wave of easy money from the U.S. quantitative easing.

This is the ninth round of cooling measures announced by the government since 2009. While transaction volumes have been affected periodically by each tranche of measures, there has not been any meaningful drop in prices.

Analysts say the latest move will impact HDB upgraders the most, which will in turn affect the private property market.

(Read more: Singapore takes further steps to cool housing market)

"If the resale HDB market starts to cool down, it will affect the sentiment of HDB upgraders looking to buy private property and adversely affect the (private) mass-market segment," David Lum, an analyst at Daiwa, said in a report. Meanwhile, amid tighter home loan requirements, "the negative knock-on effects across property segments could be more direct and more immediate."

"We see no positive implications for home prices (HDB or private)," he added, expecting home prices to fall by 18-20 percent from the end of 2012 through the end of 2015.

With HDB buyers now likely to cut their budgets, David Neubronner, national director for residential property at Jones Lang LaSalle Property Consultants, expects the hardest hit by the new measures will be sellers of the largest HDB flats.

"Those are the most likely to buy the mass-market private condominiums. The effect will run through the private market," he said.

But will permanent residents denied the HDB market seek out private housing? It's unlikely, Neubronner said, noting that private mass-market flats are likely too expensive.

(Read more: Is the heat off Asia's hottest property market?)

That also means the latest measure is unlikely to affect the high-end segment, he added, as the price differential between HDB and luxury homes is often in the millions of dollars.

Price correction?

Even before Tuesday's measures, analysts were expecting Singapore's property prices to take a hit from the government's previous efforts, which included limiting mortgage sizes to keep borrowers at a total debt servicing ratio of 60 percent of monthly income.

"The last measure that was introduced is a killer" for the private market, Kevin Scully, executive chairman at NRA Capital, said before the new HDB restrictions were announced.

He was referring to the last round of measures announced in June which included increasing down payments for borrowers with more than one mortgage, limiting loan-to-value ratios and imposing additional stamp duties on purchases.

(Read more: Will Fed tapering erode Singapore's appeal?)

Scully expects property investors will start looking overseas or seek more "bite-sized" investments rather than enter Singapore's physical market.

"With the rise in rates globally, their financing cost will go up. It's going to be hard for them to find buyers. That will lead to a selloff in the secondary market," he said. He expected a possible 20 percent correction.

Still, not everyone expects the latest measures to have much impact. "These measures are likely to impact marginal buyers with little effect on overall resale transactions," George Koh, an analyst at OSK-DMG, said in a note.

He expects the restrictions on permanent residents to send demand into the private residential market, either via rentals or purchases. "This bodes well for the private market over the medium term," he added.

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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