Are Executive Condominiums (ECs) Still the Best Choice for Local Buyers?

Executive Condominiums (ECs) are a popular hybrid housing typology combining private condominium facilities with public housing eligibility criteria, and their prices have reached record levels in recent years.

Amid rising demand, a supply shortage, and climbing land tender prices for EC sites, newly launched units have seen corresponding price increases.

According to data from the Urban Redevelopment Authority (URA), the median price of new ECs reached a fresh high of $1,417 psf in 2023.

However, over the past five years, EC price growth has been considerably more moderate than that of other private residential segments, keeping new ECs relatively affordable compared to new private homes in the market.

The median price of new ECs grew 28.9% from $1,101 psf in 2019 to $1,417 psf in 2023.

In contrast, the median price of new landed properties surged by a steep 112.9% from $1,053 psf to $2,242 psf, while new non-landed private properties jumped 49.4% from $1,664 psf to $2,486 psf over the same period—an increase of nearly half.

EC price growth continues to trail other market segments

Although ECs are built by private developers, they remain priced below private condominiums. The government provides substantial subsidies for EC buyers, with housing grants comparable to those for public housing. EC developments are fully privatised 10 years after completion, after which units can be sold to foreign buyers.

However, ECs are subject to stricter purchasing rules, eligibility criteria, a Minimum Occupation Period (MOP), and specific resale restrictions, akin to Build-To-Order (BTO) public housing flats. To qualify for a new EC, buyers must be Singapore Citizens or a citizen married to a Permanent Resident. Additionally, buyers cannot own other residential properties during the MOP and must adhere to the Mortgage Servicing Ratio (MSR) on top of the Total Debt Servicing Ratio (TDSR).

One key reason EC price growth has lagged behind other segments is the financing restrictions and household income ceiling imposed on buyers.

On top of existing TDSR rules, eligible EC buyers are capped by a 30% MSR, meaning borrowers can commit only up to 30% of their gross monthly income towards servicing their new EC mortgage. Furthermore, buyers of new ECs are bound by a household income ceiling.

If EC prices rise too steeply, buyers will face substantial cash outlays, which could price many prospective buyers out of the market.

Consider a couple with a combined gross monthly income of $16,000 purchasing a new EC. While they can borrow up to a 75% loan-to-value limit, the maximum loan amount restricted by the 30% MSR works out to approximately $1 million.

If they purchase a 1,000 sq ft three-bedroom new EC at $1,400 psf ($1.4 million), they must fund the remaining $400,000 using cash and/or CPF (of which a minimum of 5% of the purchase price must be in cash), over and above stamp duties, legal fees, and other ancillary costs.

Strong future profit potential

Data indicates that the vast majority of ECs yield healthy resale profits. An analysis of resale transactions from 2007 to 2023 shows that nearly all units (6,338 out of 6,341 units) were profitable, with an average gross profit of over $360,000 per EC unit.

Among these, 1,307 units recorded gross profits of at least $500,000, with 7 units netting gross profits exceeding $1 million.

Tight supply underpins EC prices

The EC segment is currently experiencing a supply crunch. Over the past decade since 2014, demand for new ECs (19,072 units sold) has consistently outpaced the number of launched units (16,893 units).

So far this year, only one EC project has been launched: the 512-unit Lumina Grand at Bukit Batok Avenue 5.

This year's EC supply is set to fall below the 2014–2023 annual average of 1,689 launched EC units. By contrast, as many as 4,936 units were launched in 2012, and 3,750 units in 2015.

Looking ahead, under the 1H2024 Government Land Sales (GLS) Confirmed List, only a single 710-unit EC site at Jalan Loyang Besar is slated for release. Two other EC sites sit on the Reserve List, yielding an estimated combined total of 855 units. However, Reserve List sites are triggered for tender only when an application with an acceptable minimum bid price is received by the government.

Given the tight pipeline of EC supply, prices and buyer demand are well-positioned to remain resilient throughout the year.