SINGAPORE -- Singapore has unveiled a package of measures for the property market, including tightening lending limits for housing loans in response to a rise in interest rates, as well as new steps to moderate demand.

The move would ensure "prudent borrowing" and "avoid future difficulties" in servicing home loans, said Singapore's central bank, the Ministry of National Development and the Housing & Development Board in a joint statement late on Thursday.

The measures - including lowering the amount of government loans available to buy public housing by 5 percentage points - were announced late on Thursday and came into effect from Friday.

OCBC economist Selena Ling said the steps were prudent and should "dampen any exuberance and slow the pace of price appreciation".

The measures would have less impact on foreign investors as they are more attuned to the global interest rate situation or less dependent on loans, Ling said.

The new measures are mainly targeted at the resale public housing market, which had "overheated" this year given high prices across the island, said Christine Sun, senior vice president of research & analytics at OrangeTee & Tie.

Reuters had earlier reported record numbers of Singapore public housing apartments were sold at over S$1 million ($697,739).

The government implemented a broad package of cooling measures last December, but there was still a "clear upward momentum" in public housing prices which increased by more than 5% since then to the end of the second quarter this year, the authorities said in the statement.

Meanwhile, private home prices also rose 3.5% in the second quarter, five times the 0.7% increase in the previous quarter.

The higher prices of private and public housing apartments in Singapore, where real estate is viewed as a safe-harbour investment, have been exacerbated by COVID-19-related construction delays creating a shortage of new units.

Authorities said in Thursday's statement that interest rates had risen significantly and are likely to go up further.

"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."

Many central banks across the world have increased interest rates recently to fight inflation. In Singapore, bank mortgage interest rates are determined by commercial banks. Three local banks have in recent weeks temporarily removed fixed-rate home loans.

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.

($1 = 1.4332 Singapore dollars)