Is Singapore’s housing market turning into a magnet for foreigners?

Singapore’s housing sales in August climbed to a nine-month high, highlighting renewed demand as several new projects entered the market. Developers sold about 2,142 private homes last month, according to data released Monday by the country's Urban Redevelopment Authority. That’s the most since last November, when almost 2,600 units were sold.

In August, local buyers and the city-state’s burgeoning wealthy foreign residents flocked to both suburban and prime projects in River Valley, an expatriate-friendly district close to the city center.

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As per a Bloomberg report, the rally builds on a strong month of sales in July and has also buoyed the shares of local developers. While the pace of project launches has slowed this month, more are expected toward the end of the year.

Why the sudden interest?

The Bloomberg report said that interest has been supported by a range of factors, including an intergenerational transfer of wealth and declining borrowing costs. A key benchmark for interest rates has halved since the start of the year.

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A raft of cooling measures implemented by the government in recent years has yet to significantly dent demand in one of the priciest real estate markets in the world. The latest step, a hike in taxes on those who sell units within a few years of buying them, was introduced in early July.

Affordability concerns

The rebound in sales may further fuel the rise in private home prices, deepening concerns among locals about housing affordability, said Bloomberg. While most residents live in relatively affordable government-built housing, second-hand prices for these units have also climbed, closely tracking shifts in the private market.

Property developers in Singapore have been courting middle-class buyers by offering smaller units with more palatable price tags. In August, a majority of homes sold were priced between S$1 million and S$2 million ($780,000 to $1.6 million), according to separate data from the Urban Redevelopment Authority.