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Are you eligible to buy an Executive Condo (EC) in 2024?

In the ever-evolving landscape of Singapore's property market, executive condominiums (ECs) are the increasingly elusive ‘affordable luxury’. 


North Gaia Yishun (Artist Impression)
North Gaia Yishun (Artist Impression)

Offering a blend of upscale living and affordable luxury, ECs are the go-to option for many Singaporeans looking for a condo lifestyle without breaking the bank. 


First introduced in 1999, ECs can be considered the more successful sibling of the Design, Build and Sell Scheme (DBSS). While both are private-public collaborative developments, DBSS has been discontinued, yet ECs continued to enjoy tremendous success and popularity. Some of the EC developments today include Altura, North Gaia, Copen Grand, Hundred Palms Residences, Tenet, Sol Acres, and Bellwaters, just to name a few.  


Once a great option for the sandwiched class of Singaporeans, this affordable luxury option is getting further and further out of reach for most. 


But first, what exactly is an EC?


Think of it as the middle ground in between an HDB and a full fledged condo.


Despite having all the facilities a condo has, ECs are priced significantly lower - sometimes over 30% cheaper than condos. Designed for that sandwiched class of Singaporeans, developers can purchase land for ECs at a lower rate, thereby translating the cost savings to homeowners. 


In fact, the distinction between an EC and a condo only occurs in the first 10 years. After which, there is no apparent difference.


Now if you’re thinking - how can such a good deal exist? Well, there’s a catch (or a few).


Just before we jump into the details, we’ll just clarify one point. When we talk about buying ECs in this article, it refers to buying new ECs and not resale ECs. 


Who can buy an EC?


First up, ECs aren’t open to everyone.


Similar to HDBs, there are few eligibility schemes that grants you the privilege of buying an EC. In fact, the eligibility schemes are stricter for ECs than HDB - filtering it for those who really need it. Here are some of the main requirements (not exhaustive): 


  • Citizenship Singapore citizen only, or a citizen purchasing with a related Permanent Resident

  • Household A household must be formed (no single buyers), which means married/engaged, single with kids, or single orphans are eligible. Singles above 35 years old can also purchase with other singles who are 35 years old. 

  • Income As EC is still a public-private partnership, it is only available for those who earn less than $16k combined. Anyone who has the privilege of earning more will be pushed out to look at private condos instead. 

  • Other property Must not have owned or disposed of a private residential property in the last 30 months.

  • Past subsidies Must not have taken up their 2 housing subsidies from HDB in the past.


To check if you’re eligible for an EC, do refer to HDB’s website or reach out to us here!

So, why do people buy ECs?


Let's delve into the compelling reasons why ECs have captured the hearts and aspirations of so many home seekers.


  • Facilities Facilities in ECs are pretty much the same as full fledged condos - with at least a lap pool, a children’s pool, tennis court, gym, function rooms, and BBQ pits. From the facade, you’ll definitely not be able to tell the difference between an EC vs a Condo.

  • Affordability Affordable pricing - about 30% cheaper than private condos. What’s not to love? While the average PSF of new condos in the whole of Singapore is $2,315, that of a new EC is only $1,448! This means being able to afford a larger home at the same price.

  • EC Grants Wait what? Yes you read it correctly. Besides being cheaper than a condo, the cherry on the icing is that there are still additional grants of up to $30,000.

  • Potential appreciation Almost 100% of ECs sold between 2007 to 2023 have been profitable, averaging a decent gross profit of over $360k each (The Business Times, 2024). In fact, the highest appreciation for ECs even exceeded over a million dollars! 


Does getting an EC sound attractive to you now? With the various benefits, it sounds like a no-brainer to get an EC.

But what are the disadvantages?


1. Locations might not be as popular

Firstly, the locations of ECs tend to be on the outskirts. Places like Tampines, Punggol, Canberra, Sembawang, Bukit Batok have been where new ECs are located. Not only that, most ECs also tend to be further away from MRT stations - so prepare to commute via LRT or bus if you don’t have a car. 


2. Limited number of launches/available supply

While there are several launches of private condos each year, the government limits the number of new ECs. For example, in 2023, while there were over 30 new private development launches, there was only one new EC launch, Altura.


In 2024, there will be absolutely no EC launch, with the next being in 2025 at Tampines. Reach out to us here if you’d like to receive more information about it!


3. A conflict between price, income, and loan regulations

For most buyers, this would be the greatest barrier. We’ve previously talked about how even though ECs are lower priced than private condos, there is a limitation on the eligible income ceiling. However, the major factor restricting EC purchases is in fact the way the loan is calculated. When borrowing for ECs, buyers can only take a bank loan with a loan-to-value ratio of up to 75% of the property value/price. However, what makes it even harder is that EC loans are calculated similarly to HDB purchases, using a 30% Mortgage Servicing Ratio instead of the 55% Total Debt Servicing Ratio used for private loans.


Case Example (all calculations for illustration purpose only)

Take for example a property that is priced at $1,300,000 (for reference, Altura, the latest EC launch, is priced at $1.37M onwards). In this case, the max loan-to-value (LTV) would be $975,000. To loan that amount as of May 2024, your required household income should be at least $17,050 (at the longest loan tenure of 30 years). If you recall, new ECs have an income ceiling of $16,000. Therefore, the regulatory restrictions would instantly prevent almost all buyers from taking the full 75% LTV, regardless the price of the EC. The maximum loan amount when buying an EC today will be around $914,868. The consequence is that buyers require higher CPF OA/Cash (approx $400k+) to compensate for the lower loan, with younger buyers tend to struggle the most. With some ECs being above $2.2 million, this means buyers could potentially pay over $1.5million in cash/CPF OA for a new EC!


 

The phenomenon we're facing today is mainly a result of a higher interest rate environment and rising EC price, without a change in the EC income ceiling. 


In the event where any one of the factor changes, more buyers could have the chance of owning a new EC. However, the fact is only an extremely small group of buyers will be able to enjoy the privilege of getting a new EC today.


 

If you’re curious to find out if you'd qualify for a new EC, simply reach out to us below, along with the message “I want to explore EC”.



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