New Reporter
15-08-23, 14:14
Consider building executive condos in prime locations
Leslie Yee
Aug 14, 2023
RELIEF may be in sight for aspiring private home buyers. It looks like home prices and interest rates will not rise further and may even soften.
In the second quarter of 2023, private home prices slipped 0.2 per cent according to data from the Urban Redevelopment Authority (URA) – the first decline since Q1 2020.
Still, private home prices have risen sharply versus pre-Covid days. Based on URA’s data, prices in Q2 2023 rose 26.6 per cent versus Q4 2019.
High home prices make it harder for locals to realise private housing aspirations.
Today, a new condominium unit in the Outside Central Region or suburbs costs over S$2,000 per square foot or about S$2 million for a unit of around 1,000 square feet (sq ft), excluding transaction costs.
About 16.9 per cent of resident households here had monthly household income from work, including employer CPF contributions, of S$20,000 or more in 2022. A home costing S$2 million or over 8.3 times of annual income may not be easily affordable for a household earning S$20,000 per month.
Executive condominium option
Buying an executive condominium (EC) unit can be a cost-effective way for locals to achieve their private housing aspirations. A new EC unit is much cheaper than a comparable new condo unit – by possibly over 25 per cent.
One may pay S$1.4 million for a three-bedroom unit of a new EC of close to 1,000 sq ft. This is around 7.3 times of annualised monthly income of S$16,000, which is the household income ceiling for buyers of new ECs.
The EC is a hybrid of public and private housing. Built and sold by private developers, ECs typically sit on 99-year leasehold land and offer features of condominiums.
Buyers of EC units from a developer have to meet certain eligibility criteria. For example, couples need to comprise two Singapore citizens or a citizen and a permanent resident (PR), while all singles who apply under the Joint Singles Scheme must be citizens and at least 35 years old. Subject to certain conditions, buyers of new EC units can get CPF housing grants.
A minimum occupation period (MOP) of five years from project completion, during which the home cannot be sold or rented out whole, applies for buyers of new ECs. After five years, the said EC unit can be sold to Singapore citizens or PRs, or rented out whole. After 10 years, the EC unit can be sold to anyone – including foreigners – just like a private condominium.
Based on recent state land tenders for EC sites and new EC launches, interest from developers and home buyers in ECs is strong.
Better EC sites
In a column in The Level Ground last year, I argued that the government can consider raising the supply of EC sites and expanding eligibility criteria for locals to buy new ECs.
Consideration can be given to not just increase the number of EC sites, but the quality of such sites. Help locals own private homes in prime locations via the EC route.
In the H2 2023 Government Land Sales (GLS) Programme, there are eight confirmed list private housing sites that can yield an estimated 5,160 homes, including an EC site for the building of an estimated 560 homes at Plantation Close in Tengah in the west.
https://i.imgur.com/JxxMhDu.png
From the H2 2023 GLS sites, perhaps a centrally located site such as Zion Road (Parcel A), near Havelock MRT station, could be used to build EC units instead.
Looking at previous GLS sites that were sold, possibly a site in the established residential enclave of District 15 which houses Tembusu Grand, could have been sold as an EC site instead. Or a suburban site housing an integrated development with direct connectivity to the MRT station, such as that which houses the Lentor Modern project, could have been had its residential component designated for building of EC units instead.
In the 1970s and 1980s, Housing and Urban Development Company (HUDC) flats were built to cater to the needs of locals who wanted something between a Housing and Development Board (HDB) flat and a condominium. Some HUDC flats were built in sought after locations such as Newton, the Farrer Road area and Marine Parade.
The government is building new HDB flats in prime, central locations such as the city centre and the Greater Southern Waterfront. Building HDB flats in prime locations will help prevent social stratification, which could happen when attractive locations are occupied only by the rich.
New HDB flats built in prime locations under the Prime Location Public Housing (PLH) model come with onerous conditions for buyers as these flats are priced with additional subsidies, on top of the large subsidies already provided for Build-To-Order flats.
For example, the MOP is longer for PLH versus non-PLH units, and tighter restrictions apply to renting out PLH units. Also, resale PLH flats are ringfenced for buyers who can buy flats directly from HDB, and buyers of PLH flats from HDB will pay the authority a percentage of resale proceeds upon the sale of their flats.
Perhaps a prime location EC model can be considered for ECs that are built in central locations.
More onerous conditions can apply to buyers of prime location ECs, be it tighter restrictions on renting out of the units or a longer MOP. Clawing back part of the proceeds on the sale of EC homes in prime locations can also be considered.
Invariably, prices of ECs in prime locations will be higher than those in non-prime ones. To help ensure more people can buy new prime location ECs, maybe some buyers can receive a grant to help fund the purchase of the said homes. The grant could be repaid together with accrued interest upon the resale of a unit.
Whether due to hard work or ability or luck, some people can buy a nicer home, eat pricier meals, afford fancier holidays, and buy better cars than others. No government can fully satisfy the dreams of people to live in Orchard Road, Bukit Timah or Katong.
However, anchoring locals to Singapore and giving them a stake in the country’s growth via homeownership matters. Extending more help to relatively affluent locals in chasing private home dreams through the cost-effective EC route can strengthen our social compact.
https://www.businesstimes.com.sg/opinion-features/consider-building-executive-condos-prime-locations
Leslie Yee
Aug 14, 2023
RELIEF may be in sight for aspiring private home buyers. It looks like home prices and interest rates will not rise further and may even soften.
In the second quarter of 2023, private home prices slipped 0.2 per cent according to data from the Urban Redevelopment Authority (URA) – the first decline since Q1 2020.
Still, private home prices have risen sharply versus pre-Covid days. Based on URA’s data, prices in Q2 2023 rose 26.6 per cent versus Q4 2019.
High home prices make it harder for locals to realise private housing aspirations.
Today, a new condominium unit in the Outside Central Region or suburbs costs over S$2,000 per square foot or about S$2 million for a unit of around 1,000 square feet (sq ft), excluding transaction costs.
About 16.9 per cent of resident households here had monthly household income from work, including employer CPF contributions, of S$20,000 or more in 2022. A home costing S$2 million or over 8.3 times of annual income may not be easily affordable for a household earning S$20,000 per month.
Executive condominium option
Buying an executive condominium (EC) unit can be a cost-effective way for locals to achieve their private housing aspirations. A new EC unit is much cheaper than a comparable new condo unit – by possibly over 25 per cent.
One may pay S$1.4 million for a three-bedroom unit of a new EC of close to 1,000 sq ft. This is around 7.3 times of annualised monthly income of S$16,000, which is the household income ceiling for buyers of new ECs.
The EC is a hybrid of public and private housing. Built and sold by private developers, ECs typically sit on 99-year leasehold land and offer features of condominiums.
Buyers of EC units from a developer have to meet certain eligibility criteria. For example, couples need to comprise two Singapore citizens or a citizen and a permanent resident (PR), while all singles who apply under the Joint Singles Scheme must be citizens and at least 35 years old. Subject to certain conditions, buyers of new EC units can get CPF housing grants.
A minimum occupation period (MOP) of five years from project completion, during which the home cannot be sold or rented out whole, applies for buyers of new ECs. After five years, the said EC unit can be sold to Singapore citizens or PRs, or rented out whole. After 10 years, the EC unit can be sold to anyone – including foreigners – just like a private condominium.
Based on recent state land tenders for EC sites and new EC launches, interest from developers and home buyers in ECs is strong.
Better EC sites
In a column in The Level Ground last year, I argued that the government can consider raising the supply of EC sites and expanding eligibility criteria for locals to buy new ECs.
Consideration can be given to not just increase the number of EC sites, but the quality of such sites. Help locals own private homes in prime locations via the EC route.
In the H2 2023 Government Land Sales (GLS) Programme, there are eight confirmed list private housing sites that can yield an estimated 5,160 homes, including an EC site for the building of an estimated 560 homes at Plantation Close in Tengah in the west.
https://i.imgur.com/JxxMhDu.png
From the H2 2023 GLS sites, perhaps a centrally located site such as Zion Road (Parcel A), near Havelock MRT station, could be used to build EC units instead.
Looking at previous GLS sites that were sold, possibly a site in the established residential enclave of District 15 which houses Tembusu Grand, could have been sold as an EC site instead. Or a suburban site housing an integrated development with direct connectivity to the MRT station, such as that which houses the Lentor Modern project, could have been had its residential component designated for building of EC units instead.
In the 1970s and 1980s, Housing and Urban Development Company (HUDC) flats were built to cater to the needs of locals who wanted something between a Housing and Development Board (HDB) flat and a condominium. Some HUDC flats were built in sought after locations such as Newton, the Farrer Road area and Marine Parade.
The government is building new HDB flats in prime, central locations such as the city centre and the Greater Southern Waterfront. Building HDB flats in prime locations will help prevent social stratification, which could happen when attractive locations are occupied only by the rich.
New HDB flats built in prime locations under the Prime Location Public Housing (PLH) model come with onerous conditions for buyers as these flats are priced with additional subsidies, on top of the large subsidies already provided for Build-To-Order flats.
For example, the MOP is longer for PLH versus non-PLH units, and tighter restrictions apply to renting out PLH units. Also, resale PLH flats are ringfenced for buyers who can buy flats directly from HDB, and buyers of PLH flats from HDB will pay the authority a percentage of resale proceeds upon the sale of their flats.
Perhaps a prime location EC model can be considered for ECs that are built in central locations.
More onerous conditions can apply to buyers of prime location ECs, be it tighter restrictions on renting out of the units or a longer MOP. Clawing back part of the proceeds on the sale of EC homes in prime locations can also be considered.
Invariably, prices of ECs in prime locations will be higher than those in non-prime ones. To help ensure more people can buy new prime location ECs, maybe some buyers can receive a grant to help fund the purchase of the said homes. The grant could be repaid together with accrued interest upon the resale of a unit.
Whether due to hard work or ability or luck, some people can buy a nicer home, eat pricier meals, afford fancier holidays, and buy better cars than others. No government can fully satisfy the dreams of people to live in Orchard Road, Bukit Timah or Katong.
However, anchoring locals to Singapore and giving them a stake in the country’s growth via homeownership matters. Extending more help to relatively affluent locals in chasing private home dreams through the cost-effective EC route can strengthen our social compact.
https://www.businesstimes.com.sg/opinion-features/consider-building-executive-condos-prime-locations