Most newly weds cannot afford the executive condominium type of homes. The executive condominiums have higher pricing level and HDB restrictions than the regular condominiums. One of the restrictions implemented by the HDB is the 5 year minimum occupation of the occupant. The occupant may however ask for the housing to become a private estate after 10 years. The latest sales launch in Singapore were made by the following developers
- FCL Compassvale Pte Ltd at the Esparina Residences
- MCC Land (Singapore) Pte Ltd at the Canopy
- Punggol Field EC Pte Ltd at the Prive
- Maxdin Pte Ltd & Lee Carriers Pte Ltd at the Austville Residences
- Pasir Ris EC Pte Ltd at the Belysa
- Qingdao Cosntruction (Singapore) Pte Ltd at the RiverParc Residence
- Grand Isle Holdings Pte Ltd at the Blossom Residences
Here is the list for future EC development in Singapore
- Hoi Hup Realty Pte Ltd at the Tampines Avenue 8
- Camborned Developments Pte Ltd at the Choa Chu Kang Drive
- Sim Lian Land Pte Ltd at the Tampines Central 7
- FCL Tampines Court Pte Ltd & Keong Hong Construction Pte Ltd at the Punggol Way Punggol Field
The executive condominium housing type in Singapore started in 1996 as a way for the government to raise the standard of living and change the town image of most places in Singapore to a better up market residential area. The architecture and design of the executive condominiums were inspired from the styles and layout of private condominiums. The government’s economic plans on raising or meeting the match of the income level of the population evolved from recycling condominium formula. The design was to make housing accessible to the larger population with lower budget.
The main goal of the Executive Condominium Housing Scheme was to provide access to couples whose total monthly income does not exceed $10,000. This broadens the supply for private housing through the indirect financing by the state. The income ceiling for the household to become eligible for the executive condominium housing is $10,000 per month. Buyers were required to pay at least 20% down payment or equity in cash and settle the remaining balance through monthly installments. The occupants were allowed to sell the flat to foreigners only after tenure of 5 years.
What is the HDB flats average resale price?
It can be sensed that the HDB flats are not clear even in the annual report. We could give the range of the HDB flat prices and the statistics for the demand and supply for the HDB flats collected from different regions in Singapore.
The price range of the HDB flats were the following based on the information on the 2009 to 2010 housing statistics
- Jurong West offered $86,000 to $103,000 for a 2 room condo, $138,000 to $173,000 for a 3 room condo, and $223,000 to $266,000 for a 4 room condo.
- Choa Chu Kang offered $140,000 to $169,000 for 3 room condo and $225,000 to $278,000 for a 4 room condo.
- Bukit Panjang offered $72,000 to $94,000 for a 2 room condo, $125,000 to $157,000 for a 3 room condo, and $210,000 to $250,000 for a 4 room condo.
- Woodlands offered $141,000 to $175,000 for a 3 room condo and $228,000 to $288,000 for a 4 room condo.
- Sembawang offered $83,000 to $104,000 for a 2 room condo, $128,000 to $172,000 for a 3 room condo, and $212,000 to $275,000 for a 4 room condo.
- Punggol offered $89,000 to $114,000 for a 2 room condo, $151,000 to $188,000 for a 3 room condo, and $234,000 to $322,000 for a 4 room condo.
- Sengkang offered $74,000 to $98,000 for a 2 room condo, $116,000 to $171,000 for a 3 room condo, and $203,000 to $271,000 for a 4 room condo.
- Hougang offered $88,000 to $111,000 for a 2 room condo, $142,000 to $182,000 for a 3 room condo, and $231,000 to $288,000 for a 4 room condo.
The prices indicated above were the actual pricing under the BTO program. Based on the listing, we can say that the couple’s total income should be at least below $8,000 in order to qualify for the BTO flats offered by the HDB. The BTO is about 20 to 30% cheaper than the prices of resale flats. The Prime Minister of Singapore also officially declared this statement.
Resale flats income ceiling level
There should be no ruling on ceiling income for resale flats. This is only agreeable if you are thinking of getting a HDB loan or housing grant. However, looking at the HDB website, the income ceiling for buying a 3 room mature town estates, 3 room premium, or 4 room bigger flat should not exceed $10,000. If you need to buy a flat for an extended family, then your income should not exceed $15,000. If the income ceiling is eliminated, then more demands would be seen each year especially those coming from permanent residents. The ceiling income resale HDB makes it impossible for first time buyers to meet the increase of resale prices from HDB.
Let us take a look at the population statistics from 2008 to 2010. In 2008, there were about 3,642.7 permanent residents combined with Singaporeans out of the total population of 4,987.6 in Singapore. In 2009, there were about 3,733.9 permanent residents combined with Singaporeans out of the total population of 4,987.6 in Singapore. In 2010, there were about 3,771.7 permanent residents combined with Singaporeans out to the total population of 5,076.7 in Singapore.
The chart for supply and demand including the population increase tells us only one thing. There would be increasing consumers for the HDB flats in Singapore and if the government continues the agenda of simply raising income ceiling and pricing to deter demand, then it would be impossible for these people to gain access to low cost decent housing. The top government officials should know that the answer to the increasing demand is absolutely not raising income ceiling and pricing of the housing units. Even though this could delay expression of interest from interested buyers, it still cannot eliminate the demand. The impact is on the capability of the interested low income buyer to access decent low cost housing. Did the government ever think about the impact to low income buyers? Where will these people go?
What is the implication about higher income ceiling to low income interested consumers?
The demand curve would never be changed by merely increasing the income ceiling but another housing program might do. Even if the income ceiling would be raised to $10,000 from $8,000, there would still be more demands because HDB flats would still come out the cheapest among the housing units for sale in Singapore. This is the main reason it would be difficult for the government to create a big decline with regards to the interest of the people to buy an HDB flat.
Income ceiling and its role in housing loan access
The maximum loan amount for $8,000 income ceiling is only $890,000. The maximum loan amount for $10,000 income ceiling is $1,113,000. The amounts were based from home loan calculators in Singapore.
Relationship of raising income ceiling to developers
The developers may find the additional mark up of $223,000 interesting as a result of the increase in the income ceilings. There would be more bidding from the developers and more aggressive buying of lands and contracts. The $223,000 was the difference between the income ceiling values of $113,000 and $890,000.
The big difference between the income ceilings is undoubtedly raising hopes for developers to make more profits that would lead to more biddings on land and housing projects. The government would take this movement as a good timing to increase the prices of the real estate properties specifically land market values. The potential HDB buyers might take the succession of events as income tax and price increase burden including loan requirements. However, this could increase the government revenues.
The least undesired effect is the government to be possibly controlling union between couples. This is possible by pushing couples to decide to marry late because their combined income won’t be enough to keep them independent. The requirements for eligibility of buying HDB properties would be stiffer then because of the high demand and aggressive movements of the property buyers. In this case, there would be competition between the local residents, Permanent Residents, and the commercial property buyers.
If we review the story of the Tampines Centrale 8 issue, DBSS developers made a lot of profit because of the higher income ceiling. The local consumers chose to buy the property using their company than directly to the HDB because they find the prices of the DBSS developers more affordable than the HDB income ceiling.
Isn’t this something to reconsider? It is still the same supply, the same demand, but economically making it a bit difficult for the consumers to allocate funds for the housing and other needs. Is HDB helping the local population or helping the DBSS developers? What is the real purpose of the HDB? Based from home loan affordability computation, DBSS developers were able to raise prices on a competitive level but little less with the set HDB prices. Higher income ceiling affects the loan interest rates and it would be quite difficult for real local consumers to meet the monthly amortizations. They were hit really hard with the changed in the income ceiling for HDB flats.
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