EC: Easier now for second-time buyer!

By The Folks @PropTalk - March 3, 2012 No Comments
Sales of executive condominiums (ECs) look set to climb higher.

This comes after the government tweaked its housing policy to allow more second-time buyers to own ECs.

Analysts said the move, however, may impact the resale prices of private condominiums.

Home buyers purchasing their second flat from the Housing and Development Board (HDB) will now have more opportunities to own an EC.

This comes after the Minister for National Development Khaw Boon Wan announced in Parliament that the percentage of ECs allocated to second-timers will rise six-fold from the current 5% to 30%.

The allocation will apply during the first month of public sales launch for EC projects.

Analysts said that out of the 5,000 ECs to be released in 2012, some 1,500 of them will now be allocated for second timers.

They added that this will also raise the interest of the "sandwich class" to own an EC.

And second-timers can also save on the resale levy when they purchase the new EC projects.

This is a fee paid by the buyer to the HDB when purchasing a second subsidised flat, and can range between $15,000 and $50,000, depending on the flat type.

Nicholas Mak, executive director of Research and Consultancy at SLP International, said: "Today's announcement will be welcomed by the second-timers because previously in the initial launch, only 5% of units are allocated to second-timers, but now 30% will be available for their selection, which means that now they do not have to be dependent on the leftover units that the first timers do not want, but they will have at least more choices at the initial start of the launch."

Analysts said the new rules may have an impact on demand for private condominiums.

As prices for ECs are about 20% cheaper than mass market private condominiums, experts said some buyers may drop plans to buy a private condo and opt for an EC instead.

However, they do not expect prices of ECs to jump higher.

Analysts expect the government to release more land for EC development and the increased supply may put a cap on prices.

Colin Tan, head of research consultancy at Chesterton Suntec International, said: "If there is any increases, it will be marginal, because I think the whole market for EC is still price sensitive; while developers can push prices up a little, they have to be mindful of the fact that this is a price-sensitive market."

Meanwhile, the move to revise the income ceiling of buyers from $10,000 to $12,000 in September last year for all EC projects has boosted sales.

Experts estimate that prices of ECs have increased between 2 and 4% since the revision.
Source: Channel News Asia

So expect more GLS and more EC launches...



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