ST : Resale price rises: ECs outpace private homes

Apr 17, 2010

Resale price rises: ECs outpace private homes

By Joyce Teo

PRICES of resale executive condominiums (ECs) have risen much faster than those of private mass market homes in recent years, and have hit yet another high, a recent study has found.

From the first quarter of 2007 to the first quarter of this year, the prices of resale ECs shot up 70 per cent, compared with the 39.6 per cent rise in mass market private home prices, the study from Savills Singapore said.

ECs are meant to bridge the gap for buyers keen to upgrade from public housing, but are unable to afford private homes.

As a result of the price gains, resale mass market condos are now - on average - only about 14 per cent more expensive than resale ECs, well down from the 29.7 per cent margin in early 2007.

EC resale prices have risen to $568 per sq ft by the first quarter of the year, which is 17.4 per cent higher than the previous peak in the third quarter of 2008.

Data from the Urban Redevelopment Authority showed that prices of suburban homes were now 7.6 per cent above the previous 2008 peak.

Savills senior manager of research and consultancy Christine Sun said demand for ECs has picked up steadily since 2005.

This could be due to 'a growing number of first-time home owners, particularly the higher-wage earners entering this market at times when mass market private homes and HDB resale home prices are on the rise', she said.

Ngee Ann Polytechnic real estate lecturer Nicholas Mak said: 'Singaporeans are starting to realise that resale ECs are good buys because they can be as good as private mass market condos.'

Indeed, prices at two ECs - Bishan Loft and Simei Green Condominium - have outdone the average price of mass market private homes in the same area, though only by 0.4 per cent to 1 per cent.

A few ECs such as Whitewater in Pasir Ris and Nuovo in Ang Mo Kio are transacting slightly below the average mass market resale prices in their areas.

Of the 23 completed ECs, Bishan Loft - within walking distance from Bishan MRT station - commands the highest prices.

The seven-year-old project recorded some of the highest EC resale deals ever done. In the January-March period this year, four high-floor units there went for $800 psf to $806 psf, or $905,000 to $1.19 million.

Bishan Loft was launched for sale in 2001 at an average price of $418 psf.

Nevertheless, the record resale prices have yet to surpass the top prices paid for two ECs in the new-home market.

Buyers bought two Yew Mei Green units of less than 100 sq m direct from the developer back in April 1998 for $810 psf and $844 psf.

ECs were introduced in 1995 to bridge the gap between public housing and private apartments. Buyers of new EC units have to meet a gross monthly household income ceiling criterion of $10,000 a month, slightly above the $8,000 income ceiling for a new HDB flat.

ECs come with condo facilities but like HDB flats, they are subject to a minimum occupation period of five years. After five years, they can be sold, but only to Singaporeans and permanent residents. They become private property after 10 years, when they can also be sold to foreigners.

With more PRs buying resale ECs, the proportion of foreign buyers in the resale EC market has hit 31.8 per cent so far this year, on a par with that of foreign purchases of non-landed private resale homes, said Savills.

Its research also showed that about 35 per cent of ECs rose in price after five years, though all increased in price after 10 years. Six ECs crossed the 10-year mark last year, while another seven would have done so by year end.

Despite the price increases, there is still a gap between resale ECs of less than 10 years old and private condos, said Mr Mak. Once prices of these ECs are too close to prices of nearby private condos, their popularity will be affected, he said.

Bishan Loft is an exception, he said, as the area has not had a new condo in a while.

Said Credo Real Estate managing director Karamjit Singh: 'After 10 years, the differentiating factors between ECs and a private condo will be the quality of the finishes, the layout and the view and so on.'