By Shubham Kalia

(Reuters) -Singapore unveiled a package of measures for the property market, including tightening the maximum loan quantum limits for housing loans in response to a rise in interest rates, and new steps to moderate demand.

The tightening of maximum loan quantum limits would ensure “prudent borrowing” and “avoid future difficulties” in servicing home loans, Singapore’s central bank, the Ministry of National Development and the Housing & Development Board said in a joint statement late on Thursday.

The measures will come into effect from Sept. 30.

Many central banks across the world have increased interest rates recently to fight inflation.

Singapore’s monthly inflation rate has remained elevated in recent months, and economists widely expect the central bank to tighten policy at its scheduled review next month.

“Market interest rates have risen significantly. They are likely to increase further in future, which will affect borrowing costs for home purchases,” the authorities said in Thursday’s statement. “We urge households to exercise prudence before taking up any new loans, and be sure of their debt-servicing ability before making long-term financial commitments.”

Prices of private and public housing apartments in Singapore, where real estate is viewed as a safe-haven investment, have been rising as COVID-related construction delays created a shortage of new units.

Singapore said it will also introduce measures to moderate its property market, including a 15-month wait-out period for current and ex-private residential property owners to buy a non-subsidised resale flat from the country’s Housing Board.

The wait-out period will not apply to citizens over 55 who are moving from their private property to a four-room or smaller resale flat from the Housing Board.

The Southeast Asian city-state’s public housing system – which sells government-built apartment units directly to citizens on a 99-year lease – has led to over 80% of Singaporeans owning their homes, one of the world’s highest rates.

(Reporting by Shubham Kalia in Bengaluru; Editing by Anshuman Daga, Alex Richardson and Leslie Adler)