SINGAPORE — Property prices in Singapore have climbed in the past two years, and will likely keep going up despite the government’s efforts to cool the market, analysts and real estate agents told CNBC.

Private residential prices could rise between 1% to 3% in 2022, according to Leonard Tay, head of research at real estate agency Knight Frank Singapore.

JLL Singapore expects prices to increase by around 2% to 4% this year, said senior Director of Research and Consultancy, Ong Teck Hui.

That’s still a much slower rate than price increases last year, where private home prices jumped by 10.6% in 2021 compared to a year ago.

Prices of public housing flats on the resale market also popped 12.7% last year, data from the Housing and Development Board showed.

In a bid to cool the red-hot private and public residential property market, Singapore introduced new measures in mid-December. They included higher taxes on second and subsequent property purchases and tighter limits on loans.

The measures may have less impact on Singaporean citizens and permanent residents who are buying a home to live in, agents and analysts said.

Foreign buyers, however, appear to have been deterred by the new rules.

Trisni Djohari, a PropNex real estate agent whose clients mostly come from Indonesia, said she used to receive around 10 to 12 enquiries a month.

But she said she only received one enquiry since the cooling measures were announced in mid-December until the time she spoke to CNBC in late January.

“Most of them state that now they have to think twice [before they] buy property in Singapore,” she said.

Additional buyer’s stamp duty for foreigners was raised to 30% from 20% before. ABSD is a tax that is levied on buyers of Singapore residential properties. It is calculated based on one’s residency status, citizenship and the number of residential properties the person owns in Singapore.

Entities such as property developers also need to pay ABSD when they purchase residential property, which was raised to 35% under the new rules.

JLL’s Ong said the volume of transactions in the private residential market fell 20% in the second half of December after the cooling measures were introduced, compared to the first half of that month.

Market watchers expect the effect of the cooling measures to last around two to three quarters.

“Volumes and prices are expected to show tentativeness in Q1 and perhaps Q2 2022 before underlying fundamentals kick in to re-establish homebuying demand,” Tay of Knight Frank said in an email.

Lower interest rates, limited supply and strong demand are some factors that have led to the increase in home prices.

The private residential property market was bolstered by buyers working in sectors that benefited from the Covid-19 pandemic such as technology and pharmaceuticals, Tay said. Some people also used profits from the sale of their public housing flats to upgrade to a private unit, he added.

Demand was so strong that prices jumped multiple times in a day during one property launch. According to a local media report, there were six rounds of price increases, and units sold ranged from $1,400 Singapore dollars per square foot to S$2,000 (between $1,042 to $1,490) per square foot.

“Pasir Ris 8 was the iconic one,” said Chantel Neo, a property agent at Huttons, referring to the private condominium in the eastern side of the island, which saw prices climbing during its launch.

She said it was “quite a shock to the market.” A number of potential buyers chose not to bid for a unit because the revised prices were too high, she added.

Owner occupiers will make up the majority of buyers this year, predicted Tay.

Zarifah Zain, another property agent at ERA Realty Network, said she doesn’t see those buyers being affected.

“For first time, genuine homebuyers, their needs are being prioritized, so I don’t see an impact for them,” Zain added.

Despite higher taxes, Tay said some foreigners may also be interested in buying luxury homes in the central core region of Singapore.

Prices in that segment of the market did not increase as much in 2021, according to government data.

“Given the amount of anecdotal interest from potential foreign homebuyers, the globally mobile wealthy may still be prepared to pay the 30% ABSD as a premium for entry into the Singapore prime residential market,” Tay said.

The rental market has also been hot in the past two years, and the government’s cooling measures are aimed at buyers rather than renters, noted Zain.

Demand came from various areas — including young adults or couples who want to live on their own, interim housing for those whose new homes are not ready and Malaysians who work in Singapore and cannot commute easily because of pandemic restrictions, she said.

Djohari of PropNex said she received 40 enquiries for one unit that was up for rent in 2021.

It was a “landlord’s market,” and that could continue in 2022, she said. “It’s still very hot because construction is still delayed because of Covid.”

As Singapore’s economy recovers and the government allows quarantine-free travel arrangements with more countries, there may also be increased demand from expatriates, the analysts said.

“This is likely to boost leasing demand and we could see rents rising by 5% to 7% this year,” said JLL’s Ong.

“Rental rate increases are likely to persist in the first half of 2022 supported by the tight inventory of rental stock,” said Tay.