Singapore Minister of National Development Mah Bow Tan told parliament that buyers would be allowed to borrow more from banks and use more of their pension funds to finance property purchases.

He also said the government has decided to make it easier for foreigners to buy private homes. In Singapore, 93 percent of the population owns a home - the highest ownership level in Asia.

The eagerly anticipated announcement, which will take effect immediately, gave a boost to property-related stocks on the Singapore stock exchange.

Virtually all property stocks soared to multi-year highs. The property index jumped 8.4 percent - its biggest rise since December 2001 - to its highest level in more than five years.

The broader market rose 2 percent, its biggest single-day jump since May 2004, to close at its highest level since January 2000.

Bank stocks, such as DBS Group Holdings and Oversea-Chinese Banking Corp, also gained on investor hopes of rising demand for home loans.

Singapore real-estate prices are about 36 percent down from 1996 peaks and analysts say the new measures will spur a property sector recovery that has lagged other cities in Asia. ``It opens the window for those at the margins who couldn't afford to buy property before. It just depends on whether banks will take the risk or not,'' said GK Goh Economist Song Seng Wun.

Under the new regulations, property buyers will be able to borrow up to 90 percent of the total purchase price instead of the previous 80 percent.

The bank lending limit was introduced in 1996, just before the Asian financial crisis, as part of a raft of measures designed to cool an overheating property market.

Mah also said the central bank would study how to make mortgage insurance available in Singapore to protect banks against losses arising from loan defaults.

Under the new rules, buyers will also be able to use pension funds to buy private properties with 30 to 60 year leases. Previously, buyers could tap their mandatory pension savings to finance properties that had at least 60 years until the assets reverted to the holder of lease.

``This will give buyers a wider choice of financing options when purchasing properties,'' Mah said.

Singapore is also easing restrictions on foreign home ownership, allowing foreigners to buy apartments in buildings with less than six floors.

But foreigners will still need approval to buy landed property. Analysts also said investor confidence remained the key factor for the trade-dependent country as it was facing an uncertain export outlook.

``The question remains whether this move will make borrowers any more comfortable than they were before, given the jobs situation and the general lack of confidence among consumers,'' said Daiwa Institute of Research analyst David Lum.

Over 80 percent of the 4.5 million Singaporeans live in public flats purchased from the state housing agency.

REUTERS