Are ECs really so much more attractive a buy compared to private condos?

By The Folks @PropTalk - July 3, 2015 No Comments

The wife and I came across an article in ST yesterday which talked about the rising popularity of executive condominiums (ECs) as a accessible alternative to private homes. 10 good reasons were also given as to why one should buy an EC.

While the wife and I do not disagree with the notion that ECs still have a place especially among the so-called "sandwiched-class" home buyers, we certainly have our reservations when come to sweeping statements about their attractiveness. This is probably evident by the low take-up rates with recent ECs launches (market condition notwithstanding) and calls by some market watchers to cut EC prices further in face of the current supply glut.

So to balance the scale, we have listed the "10 good reasons" in the ST article and added our 2-cents to each for good measures.

1. No Additional Buyer's Stamp Duty (ABSD) required.
Then again, this is because you won't qualify for a new EC if you already own a property.

2. After fulfilling five years minimum occupation period (MOP), EC owners are not required to have Seller's Stamp Duty when selling their property.
However, there are restrictions as to who you can sell to (See point #9). And you are not allowed to re-sell your EC unit within the first 5 years even if you are prepared to pay the SSD.

3. Deferred payment scheme available. 20% down payment, 65% upon TOP and final 15% upon legal completion.
The wife and I cannot argue with this - the payment scheme is definitely more relaxed compared to those for buying private condos.

4. No restrictions to invest in commercial or industrial property, as long as there is no residential accommodation component in the commercial unit.
Doesn't this apply to buyers of HDB and private condo units as well?

5. EC developers are now offering more to attract buyers who wish to upgrade to a subsidised private residential lifestyle living.
If "more" being lower $psf, this is mostly true but prices for new EC have also risen rather substantially over the past years with some being almost on par with the older private condos nearby.

6. Enjoy the same lifestyle perks and facilities present in other private condominiums.
This is generally true as many of the new ECs have facilities that are on par with private condos. However, the locations of many of these ECs remain a sore point.

7. For first-timer: CPF Housing Grant of up to $30,000 (for eligible buyers).
This is a somewhat attractive "carrot" but as mentioned... only for eligible buyers.

8.  Affordable pricing with low quantum compared to mass-market condominiums.
At $800psf and higher, the wife and I would not be the first to raise our hands to agree that  ECs are affordability priced. This is especially given the much lower land prices compared to private home sites and their locations.

9. Can be sold under private property status to Singapore citizens and Permanent Residents after MOP of five years and to foreigners after 10 years.
The main distinction between ECs and private condos and one of the reasons to justify the price premium on the later - you can choose to sell a private condo unit to ANYONE at ANYTIME if you are prepared to pay the SSD.

10. Good potential rental yield.
This is rather presumptuous given the less-than-ideal locations of many of the new ECs and their congregation around the same area (e.g. Woodlands and Punggol). They would also have to compete for rentals with private condos (both old and new).


The wife and I hope that the above will be of some use to new home buyers seeking to purchase their first EC apartment.


Have a great weekend everyone!


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