“An Executive Condominium (EC) is the perfect gateway to owning a private property given its affordability, making it a top choice for both first-time Singaporean buyers who enjoy CPF housing grants (up to $30,000) and for HDB upgraders with no Additional Buyer’s Stamp Duty (ABSD).”
How TRUE is this?
Yes, an EC will be privatised after 10 years. It is developed and sold by a private developer. It can even feel and look just like a regular private condominium. Yet, it may not be the best option for everyone.
While it used to be much cheaper than private condominiums, the gap is fast closing. Let’s explore both the benefits and pitfalls of purchasing an EC.
Comparison of ECs vs Private Condo
|wdt_ID||Attribute||Executive Condo (EC)||Private Condo|
|2||Cash and/or CPF||*15% to 20%||20%|
|3||Bank Loan (Max)||75%||75%|
|4||Special Bridging Loan||Applicable if you own a flat||Only applicable if current flat is sold|
|5||CPF Grants||Up to $30,000||NIL|
|6||ABSD||Not Applicable||12% upfront (remission eligible if old flat sold within 6 months of TOP)|
Deferred Payment Scheme (DPS) for EC
Most of us have parked most or a fair amount of our money/ investment in the property we currently own.
If you intend to buy a brand new private development, without selling your current place, you will need to have sufficient cash/ CPF to settle the initial 25% downpayment.
This is assuming you managed to obtain the maximum 75% bank loan.
You will also need to be aware that you have to pay both the buyer’s stamp duty (about 4%) and ABSD (12%).
Example of a Private Condo Calculation
For a $1.05 million 3-bed unit: that works out to be $262,500 (25%) plus $26,600 (stamp duty) and $126,000 (ABSD).
How many of us have this much cash and CPF on hand?
The once-popular deferred payment scheme is currently not available for private developments which have yet to obtain their Certificate of Statutory Completion (CSC or legal completion of a project).
Simply put – private property buyers of new projects will have to start servicing their loan progressively upon committing to a purchase.
Example of an EC Calculation
For a similar $1.05m brand new EC, buyers can opt for the Deferred Payment Scheme (DPS).
This requires them to fork out a 20% downpayment (as long as the bank grants them a special bridging loan or if they have sufficient CPF).
A higher purchase price at $1,081,500 (3% more) will be charged, but reduces the upfront cash/ CPF outlay.
This means they need $216,300 (20%) plus $27,860 (stamp duty), total: $244,150/-.
This is half the amount required for a private condominium.
And the best part – they only need to start servicing their loan, and the remaining 5% (cash/ CPF) when they move into their new place upon the development obtaining its Temporary Occupation Permit (TOP).
By then, they would have an additional 3 more years to save and also to sell their current flat. First-timers (Singaporean families) may also enjoy CPF housing grants between $10,000 – $30,000 if their combined income is less than $12,000.
EC buyers can also opt for the normal progressive payment scheme which is similar to a private condominium if they have no problem with the initial downpayment and are able to service the loan immediately.
Likewise, this scheme also exempts them from the additional buyer’s stamp duty.
For families who are still working hard to build up their savings/ CPF, an EC with the option of the Deferred Payment Scheme makes it a more comfortable choice as compared to a brand new private condo project.
Eligibility and Rules for Purchasing an EC
Being a form of subsidised housing, not everyone is eligible to apply for an EC.
Simply put, EC buyers need to be Singaporeans (at least 1) with less than $16,000 gross combined income and must not own any private property. Families, couples (planning for marriage), siblings (orphaned) and up to four individuals (Joint singles scheme) who fulfill the above can apply.
With Singapore’s rising income, some families can no longer apply for the most subsidised form of housing – HDB’s Built-to-Order (BTO) flats – with an income ceiling of $14,000. This group can only look to EC or private new condominium launches if they are keen on a brand new unit.
However, EC supply remains low, with just a couple of launches every year. Chances of you getting your preferred unit or even a ballot chance for second timers remain equally low.
So rather than wait and settle for just any EC new launches, it may be useful for you to speak to an experienced mortgage specialist or a trusted realtor to go through your finances.
You may well be able to afford a private condominium which gives you much more choices or you may also need to consider an HDB resale flat if it is just too taxing on finances to purchase a private property.
Even if you are eligible for an EC – consider before committing, as there is a 5-year Minimum Occupation Period (MOP).
Yes, so if you suddenly find it hard to service the loan due to a family misfortune or a need to be closer to your parents, you can’t sell or rent before the MOP (5 years from the development’s TOP).
And even then, you can only sell to Singaporeans or Singapore Permanent Residents (PRs).
Foreigners can purchase an EC only when it has been privatised after 10 years.
On the other hand, a private condominium is less restrictive. While private property owners are slapped with the seller’s stamp duty, introduced to curb speculative behaviours, they are still allowed to sell as and when they need to.
Any sale within the first 3 years from the date of the Sale and Purchase Agreement will incur a respective 12%, 8% or 4% seller’s stamp duty on the sale price.
Which means upon TOP (usually it takes about 3 years for construction), most private property owners can sell without any penalty if for instance – they find the actual unit layout a bad fit for the family.
And they can sell their units to anyone on the market.
If you can afford both a private condo and EC, think carefully before making the plunge. Pricing aside, a private condo offers greater flexibility if you need to sell in 3-5 years.
Location of ECs Are Less Than Ideal
If you haven’t already realised, most locations for ECs are hardly worth getting excited about. They are usually far from amenities or main transport hubs like MRT Station or bus interchanges, and the bulk of most new EC launches are in non-mature estates.
What do resale buyers and tenants usually look out for when buying or renting? I would say location! Some may think that’s an inevitable trade-off for a lower price.
You can’t have the best of both worlds – a lower price and a good location. However, it is still important to be discerning as not all ECs are equal.
Should you opt for an EC that is far from amenities in a more matured estate like Tampines or an EC that is nearer to amenities in a non-mature estate? This I believe, depends on several factors – immediate family support, your children’s schooling arrangement, your work location and growth potential of the particular EC.
EC’s locations are usually less ideal, but still a viable option at the right price.
Some of the available and upcoming ECs in 2020
#1: OLA (Anchorvale Crescent) by Evia & Gamuda
With an estimated $1100psf, Ola would be one of the more expensive EC launches to-date. While EC prices are all set to increase – it is important to note that Ola is surrounded by other ECs which were launched at a much cheaper PSF.
- The Vales (completed 2017) – about $800-$900psf
- Treasure Crest (completed 2018) – about $700 – $850psf
- Bellewaters (completed 2017) – about $700- $850psf
This would mean that these other EC owners, who are essentially Ola’s future competitor in the resale market, can afford to sell their units at a lower price in future.
Ola is also facing Seng Kang Community hospital and the LRT track, which means a compromised view for low floor units facing the track. Some would also consider it inauspicious to be located opposite a hospital.
How does it compare to nearby private condominiums in the area?
La Fiesta (completed 2016) which is opposite Sengkang MRT Station and Compass One (2-3 minutes walk) commands about $1200-$1300psf for its 2 and 3 bed units.
The Luxurie (completed 2015) just next door is transacting about $1050 – $1200psf for its 2 and 3 bed units.
As you can tell, while Ola is marginally cheaper, it is still worthwhile to consider resale condominiums in the vicinity in a superior location.
That said, Ola and The Vales are still within walking distance or 1 LRT Stop away from Seng Kang MRT Station/ bus interchange and Compass One shopping mall – which is rare for most ECs.
And Ola being the newest kid of the block would be a popular option for upgraders/ families looking to be near amenities and schools (within 1 km of 4 primary schools, including the coveted Nan Chiau Primary School).
#2: Piemont Grand (Sumang Walk) by CDL
2019’s only EC launch still has some units left. It also marks ECs foray into the $1000 psf price range, bridging the gap between EC and some other mass market new launches like Treasure at Tampines.
Gone are the days where ECs are priced below $1000psf, even in non-mature estate. Commute wise, it will take more than a 15-minute walk to get to Punggol MRT Station.
A little top up can get you a private condominium like A Treasure Trove (completed 2015), with most units going below $1200psf and located much closer to Punggol MRT Station and Waterway Point mall.
#3: Parc Canberra (Canberra Walk) by Hoi Hup
Another EC that was launched in the first quarter of 2020, and located considerably near to the newly-constructed Canberra MRT Station (less than a 10-minute walk or 1 bus stop away).
Average PSF is likely to be about $1080psf and like Ola, it has other ECs (future competitors in the resale market) like The Visionaire and The Brownstone that were being launched at much lower rates.
The Visionaire (completed 2018), about $800psf on average
The Brownstone (completed 2017), about $810psf on average
Notably in this area, it is the ECs are that are located nearer to Canberra MRT Station while other private condominiums like Canberra Residences (completed 2013), Eight Courtyards (completed 2014) and The Nautical (completed 2015) are slightly further away (all still within a 15-minute walk).
It is important to note that while the private condos in the vicinity are slightly older, they are transacting between $750 and $1000psf for their 2-4 bed units, much cheaper than Parc Canberra.
Most buyers coming into this area, are typically looking for “good deals”, so the pricier developments may not catch the eye of the more price conscious buyers.
Another plot of land beside Parc Canberra will also be developed and launched later in 2020 or 2021, with an estimated higher psf of $1100 – 1200psf. Given the comparison, many buyers would find Parc Canberra a better buy.
#4: Canberra Link (MCC Land Singapore Pte Ltd)
The newest kid on the block along Canberra Link will be launched later in 2020 or 2021.
It is situated just next to Parc Canberra but with a higher land price, average launch price is likely to be in the $1100-$1200psf range.
MCC would have to work harder to woo potential buyers.
#5: Parc Central Residences (Tampines Ave 10) by Hoi Hup
Estimated to be launched in the second quarter of 2020, this development is expected to be in the $1100psf range.
It joins a slew of other relatively new private condominiums in the area like The Tapestry (to be completed 2022, TOP soon in 2020) with a slightly higher price at about $1200-$1300psf on average for 2-3 bed units and The Alps (completed 2019) with an average of $1200psf.
Tampines continues to be a highly sought after area, and even though Parc Central is not located near to the main Tampines town Centre or MRT Station, there should still be considerable interest for this project.
Given the price gap between this EC and other private properties (both new and resale) in Tampines is quite close, buyers should explore their options available before committing.
The empty space/ land parcel opposite Parc Central is also earmarked as an industrial site (subject to detailed planning), so owners may not be thrilled with the new view if anything is eventually being developed.
ECs will continue to have an important role to play in the Singapore property market. For some, it remains the only option to get a brand new unit. But remember, with the limited supply and less ideal locations, it may not always be in your best interest to zoom in to just ECs.
Each family is unique with different needs, so you will be in the best position to decide what works best for you and your family. As with all property investments, your first and second property could be instrumental for your future asset growth.
My advice – be open to new ideas. More often than not, you should have more than one option be it for your very first home, or an upgrade from your current place.