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When will Singapore roll back property curbs?

With cracks beginning to emerge in Singapore's housing market following multiple rounds of cooling measures, questions are arising as to when the government will begin roll back its tightening policies.

Private home prices in the city-state registered their first drop in seven quarters in the October-December period, falling 0.8 percent on-quarter. Meanwhile, public housing prices posted their second consecutive quarterly drop, down 1.3 percent – the worst reading in eight years.

(Read more: Singapore real estate may be losing its shine)

Meantime, developer sales fell 30 percent to 14,678 units in the first eleven months of 2013, from the 20,880 units sold in the same period a year earlier.

Tricia Song, analyst at Barclays says that based on historical experience, the government is unlikely to relax the measures until prices decline 10-15 percent.

Roslan Rahman | AFP | Getty Images

"The recent softening of the residential market in terms of volumes and prices and a significant cutback in the government's land sales program might have raised hopes that the government will unwind its existing tightening policies for property. We believe this is premature as prices are still elevated," Song wrote in a note this week.

"A correction is warranted before the government rolls back policies that took four years to have an obvious impact," she added.

(Read more: Singapore's wealthy help drive global property demand)

Southeast Asia's financial center is home to one of the most expensive real estate markets in the world, with residential property prices currently 61 percent above 2009-levels, according to Barclays.

Since September 2009, the government has imposed seven rounds of measures aimed at cooling the housing market by dampening foreign demand and curbing speculation. However, prices have remained remarkably resilient owing to excess liquidity, low interest rates and a stable employment environment.

Going forward, a combination of rising interest rates and increased supply in the market could trigger a correction in 2014-2015, according to Barclays. The bank estimates home prices will fall 5 percent this year and between 5 and 15 percent next year.

By that count, investors can count out any relaxation in tightening measures until next year.

(Read more: Singapore home prices could fall 20% by 2015: Barclays)

According to Song, once the government begins to unwind its policies, supply-side measures will be eased first - such as the deferment of government land sales - followed by demand-side measures including the removal of the Sellers' Stamp Duty and Additional Buyers' Stamp Duty.

Foreigners and corporates buying residential property are subject to an additional buyer's stamp duty of 15 percent, while Singapore citizens buying their second homes pay an additional stamp duty of 7 percent.

—By CNBC's Ansuya Harjani. Follow her on Twitter: @Ansuya_H

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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.