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Buying An Executive Condominium

Buying any type of residential property is probably the most expensive ticket item in our lifetime.  Besides the primary needs of 'Owning a place called home' , the nagging questions that are probably in the back of one's mind are:

1.  Should I buy a BTO, EC or private condomimum unit?

2.  Should I Buy an EC Now?

 

Below are my personal humble opinion.  Read on and decide for yourself if you share my thoughts and whether it is the right time to consider buying one now.  

1. Should I Buy a BTO, EC or Private Condominum? 

First thing first, we need to look at the factors that could limit or determine your choice.

  1. Eligibility. As BTO and EC are meant for owners' occupation, you must formed a family nucleus and meet the eligibility criteria before you can buy a BTO or EC unit. The eligibility conditions for BTO and EC are quite similar except for the difference in household income level ($12,000 vs $14,000) and housing scheme for single. While a single SC above 35 years of age, earning up to $5,000 per month can opt for a 2 room BTO unit in non-mature estate, you need another SC single (also above 35 years of age) to buy under the Joint Singles scheme for an EC unit, So if you are a single below 35 years of age, your choice is only limited to the private condominium or the resale market. 
    For private condominum, there is no eligibility condition, it is open to anyone who has the means to purchase. 
  2. Income Level.   Next, your home options may be limited by the total gross income.  If your monthly total household income is:       (Revised income ceiling w.e.f 24 Aug 2105)
    *   below $12,000, all 3 options  (BTO, EC, private condo) are open
    *  
     $12,000 - $14,000, you can only buy an EC or private condo
    *  
     above $14,x00, your only option is private condo.
     
  3. Location.  Buying property is mainly about location and it is usually the most crucial consideration.  However, what is important to a person in terms of location may varies from buyer to buyer.  Some may look at surrounding amenities for transport and/or convenience, while others may consider being near to a table-topping school as important.   So if you like a particular location very much, whether it is  a BTO or EC or private condo project, you are likely to go for it (subject to your above eligibilty and income level qualification).
  4. Budget.  Another limiting and determining factor would be your budget.   It is prudent not to overstretch yourself in purchasing a property.   Having a budget in mind can help narrrow your options (BTO, EC or Condo) and/or the type of unit choices (1, 2, 3, 4 or 5 bedrooms).   For example, in today market, while a $700,000 budget will enable you to get a good 5 Room BTO unit, you will be stretched to find a good 3 Bedroom EC unit to your liking and be limited to a 1 Bedroom shoebox unit for private condo.   

Going further, if you still have 2 or more options open after considering all the above qualifying factors, you may want to weigh the below pro and cons to help determine the right type of home that best meet your needs.

 

 

 

To sum up, in my humble opinion, if you have to choose between a BTO and EC, it will be a tough call.  It is an easy matter to decide if both BTO and EC projects are located around the same vicinity and are launched about the same time, but in reality this is never so.  The appeal of higher potential capital gain associated with EC may appeal to some.  For others, the BTO option, being 'easier on the pocket' make more sense.

It is an easier choice to decide between EC and private condo.  Unless you aspire to own a portfolio of  properties as investment within the next 5 years, the choice should be obvious.  The 'subsidised housing cherry' is there for you to pick. If you don't pick it now, you may not have another chance if your household income exceed the ceiling threshold.  Besides, once you own a private property, coming back to public housing is difficult  because even if you are still eligibile and had sold off your private property, there is time bar of 30 months before you can apply to buy a new unit from HDB.   

 

2. Should I buy an EC Now?

Given current market situation (Aug 2014), will the EC housing price come down in the near future?
** Updated viewpoint in May 2015
 ; Dec 2015

 

Your guess is as good as mine.  We can only crystal ball the future pricing trend.  However, we do know for certainty, that there are only 3 ways prices can go in the near future: 

a.  Up North.     There is always a positive correlation on unit selling price with land price.   From the chart below, the land price for Punggol/Sengkang ECs has been inching up slowly over the years.  So, if there is no external shock to the economy, it is not wrong to assume that the prices will continue to go up along with inflation and increasing cost of construction.  

 (May 2015 Update)    The chart below showed the correlation on land with launch pricing continuing for the last 3 launches (Bellewaters, Terrace and Amore) in Punggol. However, with the last land award (February 2015) for the Anchorvale Crescent site in Sengkang, launch pricing is not likely to head further north in near future. 

 

b.  Flat.   The successive Government cooling measures have moderated the rate of price increase.  The writing is already on the wall that the era of low interest rates will soon be over.   So even if the prices stay flat, would it be better to commit and lock in at a lower interest rate now than to wait further.           

Looking at the latest bullish land bid price for the Westwood Avenue site @$386psf, which is higher than those projects that has been launched (@$355psf above), it is likely that EC prices will continue trending upward if economy performs stronger than expected and will remain flat if ecomomy stays status quo. 

(May 2015 Udpate) IMHO, between now till the last Anchorvale Crescent EC is launch (earliest May 2016), EC prices is likely to stay flat. Vales EC, the next launch in Sengkang (June/July 2015) is also likely to be priced around current market price despite its higher land price.

(Dec 2015 Update).  As expected in this sluggish market, Vales EC was launched at about the same psf as Bellewaters.   Barring any market intervention, between now and the new launch at Anchorvale Crescent, prices is expected to stay flat. 


c. Down South. If EC prices do actually head south in the near future, there is actually less to fear if you buy an EC unit as compared to a private condominium. The reasons being:

  • There is already a pricing differential buffer of about 15 – 30% compared to similar private condominium around the vicinity. This buffer would be higher if you are eligible and had opted to enjoy the housing grant.  
  • EC are meant for owner occupation and any pricing dip would not be as great as  in private condo.  In addition, the minimum occupation period of 5 years is actually a blessing in disguise. It effectively helps to ensure no similar unit from the same project will be in the resale market during the construction plus MOP period (8 years), lowering the risk of margin calls from the bank.  
  • With an eye to the next General Election (due 2016), there are strong opinions that the Government may turn 1 or more of its cooling measures into 'stimulating measures' to moderate prices falls if needed.  In other words, unless there is a economy shock, any price falls would be gradual, 

(May 2015 Update) Unless market demand is stimulated, EC prices are likely to head south only when the latest Anchorvale Cresent EC is ready for launch (earliest in May 2016). It is well and good for those who will still meet the eligibility conditions in 2016 and can wait till 2018 for the keys to their new home. For those whose household income will exceed the threshold in near future or need a home before 2018, it is best to stay tune for the star buy/discount that the existing developer(s) with unsold EC units may offer. 

(Dec 2015 Update).  The market is in anticipation for the Anchorvale Crescent launch where the new average psf is likely to be set.  My earlier opinion (May 15 update) and observation remains unchanged. It may be worth the while for those who need a home before 2018 to consider existing EC projects where the developers are offering discount from launch price.  Different buyers have different price acceptance threshold, by the time the price is right for you, there may be no suitable units that will meet your desired home selection criteria.

 

Like stock market, what goes down will eventually comes back. It is just a matter of time before prices turns upward.  The  upturn may happen by the time your unit is fully privatised.   Looking back at history, those who bought  EC around the late 1990s' peak and endured the early 2000s' bottom is probably laughing now to the bank. These privatised unit can now be sold at a healthy profit.

 

3. Impact of new household income ceiling (from $12,000 to $14,000) w.e.f 24 Aug 2015.? (Aug 2015 Update)

Over the past 2 years, the MSR ruling on loan restriction has limited the demand for larger EC unit that cost above $1 million.  Based on the last household ceiling increase from $10,000 to $12,000 in Aug 2011, it is likely that the bigger EC unit (4/5 Br) demand would be rekindled as the new group of eligbile buyers ($12,000 to $14,000) is likely to opt for a bigger EC unit if they have to switch their choice from a private condo to an EC.  

IMHO, if you are a 2nd timer applicant, and have been delibrating on the timing to purchase an EC unit, the time to act is now!!  Especially if developer is still offering good discount to clear their existing bigger units. The older EC projects where 2nd timer applicant do not need to pay resale levy will benefit more than the those projects where resale levy is applicable. 

While the EC market is back, the private condo mass market is likely to see a dip in demand and its prices heading south at a faster pace.  Then again, any of the cooling measures can be relaxed to engineer a moderate fall. 

(Dec 2015 Update).  My Aug 2015 observation was correct.  Since the household income revision, more bigger units were sold.  The 5 Bedroom units in some EC project are selling out fast while the demand for 2 Bedroom units has cooled significantly.    

In summary, property is a long term investment. In land scare  Singapore, its value should appreciate if your time horizon is at least a decade from now.   I f buying an EC unit is within your means, my suggestion is to go ahead and booked a unit that best meet your needs.  The earlier you decide, the better will be your chance to find a choice unit and called it 'home'.

 

 

 

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 Testimonial

"Thank you for patiently taking your time to show us the mock-up flats, explaining the orientation of the scale models and providing us with valuable insights into the project and financing options.

Both myself and my wife really appreciate your effort."

 -- Hairul
 

"Among the agents I have come across so far, you are one of those few whom I feel at ease and comfortable speaking to. This is my frank and sincere opinion.   You truly live up to your words “Honesty and Integrity”

-- Chee Kin

"Thanks for your very kind and helpful adivce.  The testimonials were very true indeed. Another agent from xxxx is trying to make me appoint him as sole agent for EC, but did nothing much to advise like you did.  I really appreciate it"

-- J Ong

From a satisfied client who was referred by his friend. 
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"He gave us good advice based on our requirements. ....
He paid details to every single stage of the process and returned all phone calls, texts and emails the same day.  We never felt neglected or unimportant."

-- Sean Lee

 

 

 

  

 

  

 

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