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Executive Condominiums and the “Sandwich” Class

In a previous article, we discussed the option of buying a resale HDB flat for a family with a monthly income of more than $10,000.

Posted on 06-Dec-2013
By: Elizabeth Choong

| More
Executive Condominiums and the “Sandwich” Class

In a previous article, we discussed the option of buying a resale HDB flat for a family with a monthly income of more than $10,000. This week, we will discuss the pros and cons for the same family if they plan to purchase an executive condominium (EC).

What are Executive Condominiums?

Executive condominiums are a hybrid of public and private housing. They are built by private developers but buyers are subject to a set of eligibility criteria set by the Housing and Development Board (HDB). Executive condominiums are meant to meet the housing aspirations of the “sandwich” class who wish to live in private condominiums but fall a little short financially. Singaporeans with a monthly household income of less than $12,000 are eligible to purchase an EC directly from the developer.

Why are Executive Condominiums so popular?

Executive condominiums have been in the news. In the last few months, two EC projects – SkyPark Residences in Sembawang and Sea Horizon in Pasir Ris – were launched to great fanfare.

A reason for the great demand for ECs could be the lower price compared to nearby private condominiums. Singapore Property Watch allows for easy comparison of ECs and nearby private condominiums. See table below for an example.

Comparison between Executive Condominium and Nearby Properties

Project Name

Address

Type

Average Price

Sea Horizon

Pasir Ris Rise

99-year leasehold uncompleted EC

814

Watercolours 

Pasir Ris Link

99-year leasehold uncompleted EC

727

Ripple Bay

Pasir Ris Link

99-year leasehold uncompleted private condo

918

Seastrand

Pasir Ris Link

99-year leasehold uncompleted private condo

1,044

Source: Singapore Property Watch

 

 As ECs are built by the private sector, the units are likely to have better finishing and materials compared the basic finishings that are commonly found in a new standard HDB flat. First-hand EC buyers can potentially save some money as there will be less renovations needed. In addition, ECs have facilities that are commonly found in private condominiums. For example, residents in Watercolours (an uncompleted EC) can enjoy facilities such as gym, tennis courts, children’s playground, swimming pool, clubhouse and BBQ pits.

The recent Total Debt Servicing Ratio (TDSR) has limited the amount of mortgage loan that homebuyers can get from financial institutions. A major advantage of purchasing an EC is mortgage payment for any HDB flats that is currently owned by the homebuyer will not be taken into account when calculating the TDSR. This is because he will have to sell any HDB he currently owns when purchasing an executive condominium.

Drawbacks of Buying Executive Condominium

Despite the reasons supporting the purchase of an executive condominium, potential buyers must take into consideration some of the disadvantages during their decision-making process.

Owner of an EC cannot sell it until the unit is at least five years. During the 6th to the 10th year, the owner can only sell to a Singaporean or PR who is able to form a family nucleus. The executive condominium is considered a private condominium and can be traded freely in the open market only from the 11th year onwards. This ruling will limit the number of potential buyers if the owner decides to sell the property before the 10th year.

It is more difficult for former owners of executive condominiums to buy a HDB flat. This is because they need to wait 30 months from the date of disposal before they can apply to buy a HDB flat directly from the government.

To Conclude

There are many advantages in buying an executive condominium especially for a “sandwich” class household but they must consider the restrictions and limitations imposed by the government.  If the restrictions are too onerous, it may be worthwhile for the household to consider buying a resale HDB flat or a mass-market condominium in the heartlands.

Elizabeth Choong, Content Producer of STProperty, wrote this story. To contact her about this or other stories, please email her at echoong@sph.com.sg.

 

More Articles on Executive Condominiums

SkyPark Residences tops 2013's electronic application for EC

3 EC sites rolled out amid strong demand

Cooling measures reshape EC market

Click here to go to Singapore Property Watch

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