The move comes after officials warned that increases of 50 per cent in office rents and 23 per cent in home prices this year threatened Singapore’s competitiveness in attracting foreign businesses. But the new measures could hurt earnings for builders.

The government said late on Friday that it would immediately scrap a policy that allowed buyers of uncompleted offices and homes to defer mortgage payments until the projects were completed once they made a 10 per cent down payment.

Analysts said the deferred payment scheme had encouraged speculation because many customers had bought flats in new luxury condominiums in hopes of “flipping” their investments before the mortgage payments fell due, in some cases two to three years after the initial purchase.

Feverish buying at the top end of the property market has created a ripple effect in the local property market. The rise in housing prices has provoked fears of economic overheating, with inflation hitting a 12-year high of 2.9 per cent in August.

The Monetary Authority of Singapore, the central bank, has warned that the deferred payment scheme could increase risks for banks and developers.

The scheme’s withdrawal is expected to affect Singapore-focused developers, such as City Developments, more than bigger groups, such as CapitaLand and Keppel, that have large overseas businesses. Companies that have relied on property investments for earnings growth could also be affected. Most developers have not disclosed the proportion of their sales that have been due to the scheme, although a few, such as the Lippo Group, say they have not used it.

HSBC Bank recently reported that 60 per cent of customers who bought property opted for the deferred payment scheme. Sales by owners of uncompleted property, an indication of speculation, accounted for nearly 13 per cent of property sales in the third quarter, the government said.

Prices for private homes rose 8.3 per cent in the July-September period, but the government indicated that growth could slow with more supply coming on the market next year.

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