(Bloomberg) -- Singapore home sales reached a five-month high as demand returned after a dwindling supply slowed transactions late last year. 

Purchases of new private apartments rose to 432 in February, Urban Redevelopment Authority figures showed Wednesday. That’s the second month of gains since sales slumped to a 14-year-low in December when a dearth of project launches hampered buyers.

Singapore’s property sector has remained buoyant even as countries elsewhere face slowdowns due to soaring interest rates and inflation. The government raised taxes for buyers of high-end properties in February, just months after introducing cooling measures, highlighting its confidence in the market.

“The performance seen in the first two launches of 2023 suggests that higher mortgage rates and challenging economic circumstances have not deterred enough buyers to turn the market around,” said Alan Cheong, executive director of research at Savills Plc. He expects private residential prices to rise 7% this year.

Sales in the city-state’s core central region increased last month, with slightly more than half of the private housing units sold located in prime districts, said Nicholas Mak, the Singapore-based head of research and consultancy at APAC Realty Ltd. unit ERA. This is partly because several projects in the area are due to be completed this year, attracting buyers wanting near-finished homes, he said. 

Price Strain

Still, rising home prices and rents have taken a toll on some residents. More households are re-evaluating their property purchasing plans, according to a consumer sentiment study by PropertyGuru. About 55% of Singaporeans are considering delaying buying a property until prices stabilize, while 24% are dropping plans entirely, the study found.

The increased tax in the latest budget could prompt those searching for private homes in the S$1.5 million to S$2 million ($1.1 million to $1.4 million) price range to “pause and recalibrate their purchase preferences,” said Tan Tee Khoon, Singapore country manager at PropertyGuru.

Singapore’s home prices grew 8.6% last year. Private rents jumped 30%, and are set to continue climbing another 10% to 15% this year, closing in with pricey Hong Kong leases, according to Bloomberg Intelligence. 

©2023 Bloomberg L.P.