Four 10 Hdb Owners Feel Ecs Still Relevant Pricing Concerns Persist Propnex
“PropNex has released the findings of its 2024 survey on the sentiment towards Executive Condos (ECs) on August 5. The results showed that 44% of HDB owners agreed that ECs are still a relevant housing option for middle- and upper-income families.
However, 55% of the 1,250 respondents believed that current EC prices were either ‘unaffordable’ or ‘extremely unaffordable’.”
According to PropNex CEO Ismail Gafoor, “ECs continue to be a popular choice for homebuyers in Singapore, with new EC projects often having stronger sales at launch due to their more affordable pricing.”
ECs were introduced in the 1990s as a mix of public and private homes, catering to the “sandwiched class” of middle- and upper-income households who earn above the household income ceiling for a BTO flat but are unable to afford a private condo. 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 their target market. Data from URA Realis shows that the median absolute price of ECs has reached $1.5 million as of May 2024.
Based on a mortgage servicing ratio (MSR) of 30%, an interest rate of 4% per annum (p.a.), and a 25-year loan tenure, buyers earning at the income ceiling would need to produce $596,500 in cash or CPF monies to afford an EC in the middle of the market.
To improve affordability, the most popular suggestion from respondents was to release more EC sites for tender in the Government Land Sales (GLS) programme, with 58% in favor of this option. However, since 2015, only two or three EC sites have been available for tender on the GLS confirmed list, leading to an increase in land rates.
Other suggestions included raising the household income ceiling (48%) and increasing the MSR ratio for ECs (39%). Of those who suggested raising the income ceiling, 37% proposed an increase to $20,000 per month, while 32% suggested an increase to $18,000 per month.
Introducing Parktown Residence, a highly anticipated integrated condominium in the bustling area of Tampines North. This notable project, developed by a strong partnership between UOL Group, CapitaLand, and Singapore Land (SingLand), is set to redefine urban living in the dynamic District 18. With its prime location near major expressways and a growing public transport system, this visionary development, naturally complemented by Park Town Residences, promises seamless connectivity for its residents.
PropNex also proposed three policy adjustments to combat the issue of affordability. These include increasing the MSR from 30% to 40% or even 45%, raising the income ceiling to $18,000 or $20,000, and increasing the supply of ECs to four sites per year to bring down bid prices.
However, Wong Siew Ying, head of research and content at PropNex, warns that these changes could have unintended consequences, such as crowding out lower-income households or incentivizing developers to increase EC prices.
Ultimately, PropNex hopes that these policy adjustments will help make ECs more affordable for Singaporeans while still meeting their housing needs.