(Bloomberg) -- Singapore home prices rebounded last quarter after their first drop in three years, in a sign of the persistence of a property boom that has gripped the city-state for years.

Private home valuations rose 0.5% from the previous three months, reversing a 0.2% drop in the second quarter, initial estimates from the Urban Redevelopment Authority showed Monday.

The financial hub’s exuberant property scene has largely defied a downturn seen in other markets, where rising interest rates and slowing economic growth weakened demand. It has also prompted concern by authorities, as locals chafe at the drop in affordability of homes. 

The resilient market has prompted multiple rounds of curbs in recent years, including most recently the doubling of taxes on property purchases for foreign buyers in April to 60% — the highest among major markets.   

“There is still latent demand” from buyers despite economic challenges, said Alan Cheong, executive director of research at Savills Plc, adding he expects prices to increase this year and drift more sideways in 2024. “Domestically generated demand is fueling the market.”

Read more details on the home price moves

The increase in prices was “significantly lower” than the average quarterly gain of 2.1% seen last year, the authority said. It was fueled by a rise in prices of non-landed private homes — a term describing mostly condos and apartments — which climbed 2.1% from the last quarter.

The rebound was “not a surprise” and may have been driven by popular private project launches, said Ken Foong, a Bloomberg Intelligence analyst. He maintained his expectation that home price growth will remain “muted” at less than 2% in the second half and as much as 5% for the year.

Read a Bloomberg Intelligence note on the figures

Home sales in the city-state fell to a seven-month low in August, according to the latest figures released by the URA, due to slowing demand amid a dip in major project launches. Transaction volume in the third quarter was down 26% compared with a year ago.

(Updates with analyst comments in fifth and seventh paragraphs)

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