Executive condo prices are out of reach for many. Is now the time to refine model?

Singapore has a large number of young adults who are struggling to meet their private housing goals. Buying an executive condo is a good way for locals who wish to be private homeowners. New EC units cost less than comparable condos – by as much as a quarter.

While the affordability of new EC housing for young couples may be stretched if they do not receive parental assistance. A couple earning just enough to qualify for a new EC house would have to pay S$1.46million, which is about 7.6times their annual income, which is S$16,000 a week, or S$192,000 a yearly.

The couple would struggle to find S$365,000 of cash or CPF savings in order to cover the equity portion.

The demand for new EC homes remains healthy. City Developments Ltd, C09 +1.12% developer for Lumina Grand EC Bukit Btok, said at 12pm Jan 28 that 269 homes or 53% of 512 were sold the day after the official opening. The average achieved price per square meter was S$1,464

ECs may be less expensive than condos but some of the new ECs available are hardly affordable.

Using a pricing of S$1,460 psf as a guide, a new EC residence of 1,000 sq ft – about the size of a Housing and Development Board of Singapore (HDB), four-roomed flat – costs S$1.46m excluding stamp duties and legal fees. S$1.75million could be spent on a 1,200 square foot EC unit. That’s about the size and cost of a HDB 5 room flat.

The EC is a mix of private and public housing. ECs built by private developers are usually located on 99-year land leases and have condo features.

Singaporeans can purchase a new EC property if they are making good progress in their careers.

After the completion of a new EC project, buyers are required to stay in their unit for a minimum period of five (five) years. During these five years, the home may not be sold or rented. After five years, EC units may be rented out or sold to Singaporeans. After a period of 10 years, EC units are available for sale to anyone – even foreigners – like a condo.

Local couples could be eligible to purchase EC homes if they exceed the HDB Build To Order income ceiling (S$14,000) but are able to afford a new EC flat at S$16,000 a month. A local couple whose combined monthly income is more than S$12,000 per month cannot receive the CPF Home Grant for a new EC home.

Parents who assist their adult child in funding the purchase of a home may fuel some of this liquidity.

Extended affordability

Moreover, they may not meet the mortgage servicing ratios (MSR), a requirement for buyers of EC new homes. MSR is a percentage of a borrower’s monthly gross income that goes toward repaying all loan obligations, including the one being sought. The maximum percentage is 30 percent of the borrower’s gross monthly earnings.

The monthly payment of S$5,228 for a 30-year S$1.095m home loan (75 percent of S$1.46m), with an annual rate of interest of 4%, is nearly 33 percent of the couple’s S$16,000 of income. For a 30-year loan, the monthly installment is S$5,780. That’s over 36 per cent.

In addition, the limit of total debt servicing ratio (which looks at a borrowers total monthly debt obligation) applies to EC buyers.

It is possible that the income cap for buyers of EC homes – last increased in 2018 – be raised to S$20,000 a monthly. For a married couple earning S$10,000, a S$1.46M new EC cost would be 6.1x the annualised combined income.

Monthly instalments between S$5,228 ($26) and S$5,780 ($29) are equivalent to 26 percent and 29 % of their monthly household earning of S$20,000.

In 2023 approximately 15% of employed residents, aged 15 or older and excluding the full-time National Servicemen, will have earned gross monthly incomes exceeding S$10,000, without employer CPF contribution.

jden prices

Size of the unit

Additionally, a measure that could aid young people without parental assistance in buying new ECs is to limit the maximum size of these homes that developers are allowed to build.

Lumina has 51 5-bedroom units ranging from 1,496 – 1,711 sq ft.

A 1,500 sq ft EC costs S$2,15million, which is roughly 11.2x the monthly income (annualised) of S$16,000 – and ninex that of S$20,000.

It is possible that the size of a EC home could be capped at 1200 sq ft. The monthly incomes are S$16,000, S$20,000 and S$7,400 respectively.

HDB BTO Market offers many young Singaporeans assistance in becoming homeowners. Homes are sold at subsidised price.

Let’s release a greater number of EC sites, especially those in prime location. Moreover, by increasing the income cap we will expand the number of EC homebuyers. Also, we can ensure the total amount required to buy a EC home is affordable by capping EC units.

Please refine the EC to meet the demands of the young Singaporeans that are driven and want to own their dream homes, without getting parental help.

Single Singapore citizens with a minimum age of 35 are also eligible to buy EC units.

The prices of new ECs are set by developers. Developers’ bids at competitive tenders may have an impact on prices. The winning bid of a Tengah EC plot that was closed last week, came in at S$701 psf.


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