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Thread: ECs set to ride rise in income ceiling?

  1. #1
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    Default ECs set to ride rise in income ceiling?

    Prime Minister Lee Hsien Loong announced in his National Day Rally speech on Sunday that the income ceiling to buy new HDB Build-to-Order flats will be raised from $10,000 to $12,000 and the income ceiling for new executive condominiums (ECs) will be raised from $12,000 to $14,000. Under the new policy that came into effect on Aug 24, another 86,000 Singaporean households will become eligible to buy BTO flats and another 65,000 households will be able to buy new ECs (see table).





    Source: Singstat, The Edge Property



    If the new BTO-eligible households show a strong preference for new flats instead of resale units, the sluggish HDB resale market could slump even further. However, the actual impact will likely be muted as Singaporeans who have bought two BTO flats or utilised CPF grants for two resale flats, or a combination of the two, will no longer be eligible for further BTO applications. The further tapering of BTO supply from around 22,500 units last year to 15,000 this year, and a probable continued reduction in supply next year will drive demand for resale flats.

    With more households becoming eligible, applicants’ chances of securing a BTO flat will likely be lowered owing to heightened competition from the expanded pool of buyers. While the more affluent can afford to miss the opportunity, the lower-income applicants with fewer housing options could be disadvantaged.

    The number of households eligible to buy new ECs will increase by about 65,000, but ECs could also potentially lose 86,000 households to the BTO market. The target market for ECs could therefore shrink by about 24%, or 21,000 households. The actual impact will depend on how much buyer demand will shift from ECs to BTO flats and from condos to ECs. If the government reduces the supply of BTO flats, the exodus of buyers from the EC market to BTO flats would be limited.

    Meanwhile, the price advantage of ECs could ease demand for private condos. EC prices have softened as seen in examples such as Sol Acres, which saw its first phase of 707 units launched at an average $780 psf, below analysts’ estimates of above $800 psf. There is still demand for ECs if buyers find a valid value proposition, as shown by the 247 units at Sol Acres and 185 units at The Brownstone sold over their respective launch weekends.

    Average prices at recent EC launches such as Bellewaters, The Vales and The Brownstone have been 20% to 30% lower than the new condos nearby. Additionally, units at ECs tend to be bigger than condo units of the same approximate price. For instance, 1,300 sq ft units at The Brownstone in Sembawang and at Bellewaters and The Vales in Sengkang have been sold at about $1 million, but buyers at the surrounding new condos paid a similar amount for units of between 900 and 1,100 sq ft. New ECs are also trading at lower or similar prices compared with older resale condos in the vicinity.

    The only drawback for ECs is their resale and leasing restrictions as well as the continued enforcement of the 30% Mortgage Servicing Ratio. For instance, a household with income of $14,000 can purchase a private home of up to $2.3 million, compared with an EC at only $1.17 million, assuming the borrower maximises the 60% Total Debt Servicing Ratio. ECs will likely appeal to more financially prudent buyers who prefer to keep their MSR low, or those who prefer to pay off their mortgage over a shorter number of years at a higher MSR.

    With the launched but unsold EC inventory at 2,898 based on URA’s July developer sales data and an estimated 4,888 (excluding Sol Acres’ 707 units) unlaunched units in the pipeline, the higher income ceiling will likely prove to be a boon to EC developers only if they continue to offer good value to buyers. The rise in demand will probably not lead to higher prices for new ECs in the short term. In turn, developers of mass-market private residences will probably be pressured to offer more affordable prices to shore up demand in the face of stiff competition from the ECs.



    This article appeared in The Edge Property Pullout of Issue 692 (August 31) of The Edge Singapore.

    http://www.theedgeproperty.com/sg/co...income-ceiling

  2. #2
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    65,000 households will be able to buy new ECs.

    MCL Land sells 247 units at Sol Acres

    Average price is S$780 psf; most popular units are three-bedders, followed by four-bedders

    By Kalpana Rashiwala

    [email protected]@KalpanaBT

    Aug 24, 2015


    MCL Land, a subsidiary of Hongkong Land, sold 247 units at its Sol Acres executive condominium in Choa Chu Kang Grove as at 5 pm on Sunday.

    Of these, 246 units were transacted on the first day of sales bookings on Saturday, by the time the developer closed its showflat at midnight.

    MCL Land has offered 707 of Sol Acres' 1,327 units under the first phase of the marketing launch. The average price of the 707 units released is S$780 per square foot (psf).

    The absolute number of units sold in the launch weekend makes Sol Acres the best-selling EC project so far this year.

    It beat the 185 units sold by City Developments in the launch weekend last month for The Brownstone, which is being built next to the upcoming Canberra MRT station. The 638-unit project is priced at S$810 psf on average.

    Koh Teck Chuan, chief executive of MCL Land, said: "I am quite happy with the sales for Sol Acres, considering the market as it is. Choa Chu Kang has pent-up demand for ECs and we have a huge site with a lot of amenities - including three clubhouses, three swimming pools and two tennis courts."

    The project is near two LRT stations that connect to two MRT stations - Choa Chu Kang station on the North-South Line and the upcoming Bukit Panjang station on the Downtown Line.

    R'ST Research director Ong Kah Seng described the initial weekend sales for Sol Acres as a "fairly good response" arising from the reasonable pricing of S$780 psf on average. "This is slightly lower than the $800 psf or more that EC developers have generally been sticking to."

    At 1,327 units, Sol Acres is the biggest EC development to come on the market to date. It will also be the first to have one-bedroom units, MCL said.

    Mr Koh said the most popular units have been three-bedders, followed by four-bedroom apartments, and two- and five-bedders.

    Only two units of one-bedroom apartments have been sold. He noted that potential buyers who came in on the first day were mostly nuclear families, and that the one-bedroom units were likely to appeal to singles and to young couples with no plans to have children in the near future.

    Absolute unit prices start at S$356,000 for a one-bedroom unit of 495 sq ft. Prices of two-bedders start at S$452,000 for a unit of 614 sq ft. Three-bedroom apartments are priced from S$667,000 for a 926 sq ft unit. Among four-bedroom apartments, the lowest price is S$866,000 for a 1,184 sq ft unit. A five-bedder costs at least S$1.028 million for a 1,378 sq ft.

    Three bedders account for the bulk - 330 - of the 707 units released in the first phase of sale; there are 185 two-bedders, 100 one bedders, 71 four-bedders and 21 five-bedders.

  3. #3
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    The number of households eligible to buy new ECs will increase by about 65,000, but ECs could also potentially lose 86,000 households to the BTO market.

    Look like EC is going hot.

    65293 + 86021 = 151314.

    If you have a choice will you buy EC or HDB.

    Buy HDB wait 8 years to sell.

    Buy EC wait 8 years can sell to SG, 13 years private.

    don't understand where the lost of 86,000 households to the BTO market.

    Three-bedroom apartments are priced from S$667,000 for a 926 sq ft unit.

    Among four-bedroom apartments, the lowest price is S$866,000 for a 1,184 sq ft unit.

    A five-bedder costs at least S$1.028 million for a 1,378 sq ft.

    More like lost of 65,293 households to the PC market.
    Last edited by Arcachon; 31-08-15 at 19:46.

  4. #4
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    65K households fall within the $12K to $14K monthly income bracket, while 86K households are within the $10K to $12K bracket.

    Previously, the 86K households who did not want to over commit to buy EC or PC, they will go buy resale HDB since cannot buy new BTO. So the resale HDB market will take a certain hit with this revised income ceiling for new BTO since they now can buy new BTO --> leads to lower HDB resale market demand/value --> leads to lesser demand for mass market EC or PC upgrade for HDB owners --> lead to lowered prices (this is considered a "secret" cooling measure).

    As for the additional 65K households eligible to buy EC, there will be some who wants to have a condo lifestyle but don't want to pay PC prices so they will take the bait. But remember that EC have to comply with 30% MSR compared to 60% TDSR for PC, so the demand for EC will be muted somehow not forgetting that there is a big backlog waiting to clear and new launches in the pipeline. We shall all wait and see how it pans out.

    Any other views from others here in this forum ?
    Last edited by watchlist88; 02-09-15 at 13:38.

  5. #5
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    Quote Originally Posted by watchlist88 View Post
    65K households fall within the $12K to $14K monthly income bracket, while 86K households are within the $10K to $12K bracket.

    Previously, the 86K households who did not want to over commit to buy EC or PC, they will go buy resale HDB since cannot buy new BTO. So the resale HDB market will take a certain hit with this revised income ceiling for new BTO since they now can buy new BTO --> leads to lower HDB resale market demand/value --> leads to lesser demand for mass market EC or PC upgrade for HDB owners --> lead to lowered prices (this is considered a "secret" cooling measure).

    As for the additional 65K households eligible to buy EC, there will be some who wants to have a condo lifestyle but don't want to pay PC prices so they will take the bait. But remember that EC have to comply with 30% MSR compared to 60% TDSR for PC, so the demand for EC will be muted somehow not forgetting that there is a big backlog waiting to clear and new launches in the pipeline. We shall all wait and see how it pans out.

    Any other views from others here in this forum ?
    It all depend on what individual want, after choosing please don't complain.

    You are given a chance and choose not to take, please don't complain.

    You only get to live in this World once, choose wisely after choosing please don't complain.

  6. #6
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    Default Same News different view.

    Mass-market developers to suffer on back of higher HDB, EC income ceiling

    Public housing will be more affordable to the middle class.

    This year’s National Day Parade (NDP) brought a pleasant surprise for middle-income families longing for their own public flat.

    Prime Minister Lee Hsien Loong revealed on Sunday that the income ceiling for HDB flats has been raised from $10,000 to $12,000, while that of executive condominiums (ECs) has been increased from $12,000 to $14,000.

    In addition, the household income ceiling for the existing Special CPF Housing Grant will also be raised to $8,500.
    Although this move is good news for middle-income earners, OCBC analysts warn that the increased affordability of public housing might negatively impact the already struggling mass-market private property segment.

    “This is expected to cover two-thirds of all Singapore households. Given the government’s push to improve the affordability of housing for the middle-income group, we believe there may be some impact on the private mass market segment,” OCBC said.

    Other initiatives that were unveiled at this year’s NDP Rally include the implementation of a Fresh Start Housing Scheme to help second-timer rental households own a two-room flat, as well as a Proximity Housing Grant to help couples who are looking to buy a resale flat with or near their parents, or for parents who wish to live near their married children.


    - See more at: http://sbr.com.sg/residential-proper....E8SWHIP2.dpuf

    Can buy EC who would want to buy HDB, than upgrade. Every Central Bank looking at 2 % inflation, how to grow money in the Bank.

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