The executive condominium (EC) market is expected to heat up due to a number of factors including the 'unintended effects' of skyrocketing private property prices, latest government policy and supply concerns, according to SLP International.
Demand for such homes will increase as prices of private condominiums and apartments outpace those of ECs. Prices of mass market condominiums located in the Outside Central Region (OCR) grew 16.3 percent from Q4 2010 to Q1 2013 while EC prices climbed only three percent during the same period, media reports said.
Based on SLP’s data, ECs have been popular with home buyers since they were reintroduced in Q4 2010. In fact, 94.4 percent of the 10,201 units launched for sale were snapped up as of end-June.
Moreover, the unintended effect of the recent Total Debt Servicing Ratio (TDSR) Framework could also push up demand for ECs, SLP added.
A buyer looking to upgrade from his current housing board flat could get a bigger housing loan for an EC than for private property, since the HDB monthly mortgage payment will not be included in calculations for the debt servicing ratio when banks assess the loan amount granted to an EC buyer.
Finally, the issue of supply also plays an important factor. SLP expects five new EC projects to be launched during 2H 2013. However, the next EC project is set to be launched only in August or September next year, leaving a gap in the market.
This is further aggravated by the government's latest policy requiring developers to launch an EC project for sale 15 months after the completion of foundation works or from the date the land is awarded, whichever comes first.
“During this period, the pent-up demand for ECs is likely to grow and will increase the price power of the developers of the EC projects to be launched in 2014, thus driving up the prices of ECs,” said SLP.
Romesh Navaratnarajah, Senior Editor at PropertyGuru, edited this story. To contact him about this or other stories email firstname.lastname@example.org