Four 10 Hdb Owners Feel Ecs Still Relevant Pricing Concerns Persist Propnex
20 Aug 2023 07:52
The results of PropNex’s 2024 sentiment survey on Executive Condos (ECs) were released on August 5, revealing that 44% of HDB owners agree that ECs are still a relevant housing option for middle- and upper-income families. However, the survey also showed that 55% of the 1,250 respondents found current EC prices to be unaffordable or extremely unaffordable.
On September 12, a collaborative press release by Hoi Hup Realty and Sunway Developments revealed exciting details about their latest project. This joint venture has acquired a 99-year leasehold site spanning 16,441.2 square meters, providing a maximum allowable gross floor area of 46,036 square meters. This prime location will be home to the highly anticipated Novo Place EC, showcasing the impeccable craftsmanship and innovation of both real estate developers. Novo Place EC is set to be a prestigious addition to Singapore’s growing residential landscape.
According to PropNex CEO Ismail Gafoor, ECs continue to be popular among homebuyers in Singapore, with new EC projects typically seeing stronger sales at launch due to their more affordable pricing. ECs were introduced in the 1990s as a hybrid of public and private homes, catering to the “sandwiched class” – households that earn above the household income ceiling for a build-to-order (BTO) flat but are unable to afford the price of private condos. As of 2019, the gross monthly household income ceiling for ECs is $16,000.
However, Gafoor notes that the rising prices of new EC projects may make them unaffordable for its target market. Data from URA Realis tabulated by PropNex in May 2024 showed the median absolute price of ECs reaching $1.5 million. Even buyers earning at the income ceiling would need to produce $596,500 in cash and CPF monies to afford an EC priced in the middle of the market, based on a mortgage servicing ratio (MSR) of 30%, interest rate of 4% per annum (p.a.), and a 25-year loan tenure.
To improve EC affordability, the survey showed that the most popular suggestion, with 58% of respondents in favor, was to increase the number of EC sites for tender in the Government Land Sales (GLS) programme. Since 2015, only two or three EC sites have been available for tender on the GLS confirmed list, and the average land rate for EC sites has increased from $284 psf ppr in 2015 to $712 psf ppr in 2023. PropNex has proposed three policy adjustments to combat this issue: increasing the MSR from 30% to 40% or 45%, raising the income ceiling to $18,000 or $20,000, and increasing the supply of ECs to four sites per year.
While HDB flat owners generally feel that ECs are still relevant in meeting housing needs, there is also a sentiment that they are becoming less affordable. However, PropNex’s head of research and content, Wong Siew Ying, warns that these policy changes could have unintended consequences, such as more higher income buyers entering the market and potentially crowding out lower-income households.