RESALE home prices dropped for the first time in four months in May, as growing fears over higher interest rates dampened buyer sentiment.
Prices of resale homes last month fell 0.2 per cent from April, according to the flash Singapore Residential Price Index (SRPI) released yesterday. In April, prices rose 1.9 per cent from March.
Suburban and smaller homes led the dip in resale prices, while prices of homes in the central region continued to rise at a slower pace, the index showed.
In the suburban region, resale prices of completed condos fell 1.6 per cent last month from April, with prices of completed small apartments - 506 sq ft or smaller - 1.3 per cent lower.
Property consultants said that the fall was partly caused by buyers' concerns over US Federal Reserve chairman Ben Bernanke's recent comments on tapering of quantitative easing.
Once the United States central bank embarks on such a move, interest rates are expected to shoot up, putting pressure on home loans.
Orange Tee's head of research and consultancy Christine Li said the price fall last month was essentially a correction in the market after a strong surge for the January to April period. Resale volumes decreased by 48 per cent from 1,136 transactions a year earlier to 594 transactions last month, Ms Li added.
Prices of resale properties in May were also affected by a slew of new launches that month, said R'ST Research director Ong Kah Seng.
"In months where there are fewer new projects launched, buyers tend to be more open to resale homes," said Mr Ong.