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The ultimate real estate aim for the majority of us is to move into a condo. Even yet, many people may discover that doing so is no longer financially feasible due to the cooling measures announced in December of 2017.
The Additional Buyer’s Stamp Duty (ABSD) for Singaporeans purchasing a second home has been raised from 12 percent to 17 percent, among the measures outlined. The Total Debt Servicing Ratio (TDSR) has been reduced from 60% to 55%.
However, this does not rule out the possibility of realizing one’s aspirations in the future. Choosing an Executive Condominium might be a wise decision (EC).
EC – Balance of Both World
For the sandwiched class, ECs are the best option. It’s not only for those who make too much money to qualify under the BTO guidelines; it’s also for people who want to move up from a HDB flat but can’t afford to purchase a condo.
ECs are a new kind of housing that straddles the public and private sectors. Private developers construct them, and they have condo amenities, so occupants may experience condo living for a fraction of the price. This is due to HDB’s subsidization of the purchase of new ECs. For those that qualify, grants are also available.
But on the other side, they tend to be placed in the suburbs (and generally far from the MRT). Other constraints include a five-year MOP and a restricted pool of purchasers when the units are permitted to be resold five years later, as well as HDB criteria.
HDB regulations no longer apply to them when they’re privatized 10 years after the TOP. As for condominiums, they may also be sold to foreigners.
We believe that ECs are a more appealing investment opportunity now than they were before the recent cooling measures.
There will be no upfront payment for ABSD.
As with the purchase of an HDB apartment, no other properties may be owned after you’ve purchased your new EC. You won’t be able to purchase another EC until you’ve gotten rid of your old one.
For HDB flats and ECs acquired from developers, you don’t need to get rid of your present property before purchasing a new EC. ABSD will not apply to you despite the fact that you own two homes. That means you can save $170,000 on a S$1 million property by avoiding the ABSD.
When HDB approves the EC purchase, the ABSD remission will be automatic, the same as when purchasing another HDB apartment.
Your old apartment will still be your responsibility to get rid of within six months of moving into your new EC.
If you plan to sell your apartment within the next six months in order to move up to a condo, you are still eligible for the ABSD remission. On the other hand, paying the ABSD upfront before filing for the refund makes this alternative more time-consuming and costly in the long run. As a result of the increased ABSD rate, you’ll have to pay extra for it.
As a result, by purchasing an EC rather than an ABSD, you’ll save money and CPF contributions.
Lack of Supply of EC Units
Right present, there aren’t many new ECs available. Unsold inventory is down to 1,985 units by the end of Q4 of 2021. Only Ola, Parc Greenwich, and Provence Residence contain unsold flats, excluding North Gaia.
The minimal quantity of ECs on the market indicates the great demand for the model, which makes owning one all the more appealing. As a result of the tight supply and strong demand, prices are certain to rise. However, despite this, costs will remain lower than those of condominiums.
The Tengah Garden Walk EC and North Gaia in Yishun are among the upcoming ECs this year.
Because North Gaia will be the first new EC in Yishun since The Criterion achieved its peak in 2018, we believe it will be an intriguing one to observe. It is also situated immediately next to Sungei Khatib Bongsu, which provides inhabitants with beautiful views of the park and the river from their homes.
Compared to condominiums, a higher rate of appreciation
Interestingly, ECs have witnessed bigger price increases than condominiums, despite the fact that they are deemed to be less luxurious.
ECs have had a price increase of 148.96 percent during the previous 15 years, whereas condominiums have only seen a price increase of 59.88 percent.
EC and condo price increases
When comparing new ECs with new condominiums, here is a deeper look at the price rise.
The price of new ECs has increased by 142.14 percent during the previous 15 years, while the price of new condominiums has increased by 61.95 percent.
Resale ECs have seen a rise in the value of 144.12%, while resale condominiums have seen an increase of 72.47%.
Because ECs become completely privatized after ten years, obtaining condo status, and no longer subject to HDB’s rules, the larger price rise may be a result of this. Buying an EC also indicates that, despite the fact that you paid less, you may anticipate your unit’s value to rise in the future.
