Singapore’s first-quarter home prices slid for a second consecutive quarter as tighter mortgages cooled demand in Asia’s second-most expensive housing market.

An index tracking private residential prices fell 1.3% to 211.6 points in the three months ended March 31 following a 0.9% decline in the previous three-month period, according to preliminary data released by the Urban Redevelopment Authority today. The latest drop is the largest since June 2009.

Record home prices amid low interest rates raised concerns of a housing bubble and prompted the government to widen a campaign that started in 2009 to rein in speculation in the property market. Singapore unveiled rules in June governing how financial institutions grant property loans to individuals, in addition to previous measures including new taxes and higher down-payments.

Under the new loan framework lenders must consider a borrower’s debt when granting mortgages, the Monetary Authority of Singapore said June 28. Home loans should not lead to a borrower’s total debt-servicing ratio rising above 60% and those that do will be considered imprudent, it said.

Home prices increased by 1.1% in 2013, lower than the 2.8% gain in 2012 and the smallest annual increase since 2008 when prices slid 4.7%.

Loan Growth

Mortgage loan growth at 8.4% in February was the slowest pace since July 2007, data compiled by Bloomberg based on MAS figures showed.

Apartment prices fell 1.3% in prime districts in the first quarter after sliding 2.1% in the previous three months, the URA data showed. Those in the suburbs slid 0.3%, compared with a 1% decline in the previous quarter, according to the data.

Home sales rose 1.7% in February from a year earlier as developers marketed new projects. Sales rose to 724 units compared with 712 in February 2013, according to URA data last month.

Sales of new private homes could drop to between 11,000 and 13,000 units this year from 14,948 in 2013, according to Nicholas Mak, executive director and head of research at SLP International Property Consultants in Singapore.

Singapore was the most-expensive city to buy a luxury home in Asia after Hong Kong, property broker Knight Frank LLP said in a wealth report last month.