EC Prices Hit Record High! Tight Supply May Keep Prices Climbing

Singapore’s Executive Condominium (EC) market continues to see strong momentum. The first EC launch of 2024, Aurelle of Tampines, sold 90% (682 units) on its first day of launch, setting a new historical record at an average price of S$1,766 psf.

Despite prices hitting record highs, analysts note that driven by rising land and construction costs as well as limited EC supply, EC prices are expected to climb further. Nonetheless, compared to mass-market private residential homes, ECs remain competitively priced and retain strong appeal.

EC and Mass-Market Private Home Price Gap Widens, Maintaining Strong Value Proposition

Due to scarce EC supply in recent years, significant pent-up demand has accumulated among HDB upgraders. A large pool of HDB flat owners who have met their Minimum Occupation Period (MOP) has emerged in the market, providing robust purchasing power for ECs.

Even as EC prices reach successive highs, they remain noticeably lower than private condominiums. Data shows:

In 2022, private homes in the Outside Central Region (OCR) were priced 14.2% higher than ECs.

In 2023, this gap widened to 19.5%.

In 2024, the price gap expanded further to 21.8%.

Between 2022 and 2024, OCR private home prices climbed 21.8%, while EC prices grew by only 14.3% over the same period. If private property prices continue to outpace ECs, the price disparity between the two could widen even more.

Strong Capital Appreciation Potential for EC Owners as Resale Prices Hit New Highs

Along with rising new EC prices, the EC resale market has also turned in an impressive performance.

Data reveals that the number of EC resale units netting profits of at least S$1 million surged from 15 in 2023 to 38 in 2024. In addition, figures from real estate agency SRI indicate that as of 11 March 2024, the average EC resale price reached S$1,335 psf, representing an 11% increase compared to the first quarter of 2023.

Buyers of the new Tampines project, Aurelle of Tampines, may well look to the launch price of Parktown Residences at S$2,360 psf as a benchmark for their future resale values.

Persistent Rise in EC Prices Sparks Affordability Concerns

With EC prices consistently hitting new peaks, market discussions have begun to emerge over whether ECs are becoming "hard to afford".

A survey revealed that nearly 40% of surveyed HDB flat owners consider new EC prices too high and unaffordable. More than 50% of respondents believe the government should adjust the monthly household income ceiling for ECs to widen eligibility for buyers.

Between 2023 and 2024, EC prices rose by 6.6%, whereas overall islandwide private residential prices increased by only 2.4%, indicating that the gap between EC and private home prices is narrowing.

The market is also closely watching whether the government will review EC-related policies. The last adjustment took place in 2019, when the monthly household income ceiling for purchasing new ECs was raised from S$14,000 to S$16,000. Analysts believe another upward revision may be possible in the future to improve EC affordability.

Fierce Competition for EC Land Parcels as Future Supply Grows

According to Housing & Development Board (HDB) data, three major EC projects are slated for launch in 2024:

Plantation Close EC in Tengah (estimated 560 units)

Jalan Loyang Besar EC (estimated 710 units)

Tampines Street 95 EC (estimated 560 units)

These developments are expected to draw strong interest from buyers. For instance, Pasir Ris last saw an EC launch back in 2013; the upcoming Jalan Loyang Besar EC project will address extensive pent-up demand in the area.

Furthermore, the government launched three EC land parcels across Bukit Panjang, Woodlands, and Sembawang in the first half of this year to meet growing market demand. Bolstered by stellar sales across recent EC projects, analysts anticipate these sites will attract keen developer competition, thereby pushing up land bid prices.

Rising Land Costs Will Continue to Propel EC Selling Prices

EC selling prices are driven by multiple factors, with land acquisition costs and construction expenditures playing a decisive role.

Since 2018, land prices for EC sites have repeatedly broken historical records. For example, the Tampines Street 95 EC site drew five bids in 2023, with the top tender reaching S$768 psf per plot ratio (psf ppr), setting an all-time high for land prices in the EC market.

With EC land costs continuing to escalate, analysts anticipate that future new EC launches will see further price hikes. Industry observers advise prospective buyers planning an EC purchase to enter the market early to lock in prevailing prices, and to make use of the Deferred Payment Scheme (DPS) to ease near-term financial commitments.

Market Outlook: ECs Remain the Prime Upgrading Option

Despite rising prices, analysts maintain that ECs still hold distinct advantages over private condominiums in terms of pricing, capital upside, and relative affordability. Although future EC supply is expected to expand, robust demand coupled with escalating land costs will continue to underpin EC price appreciation.

For HDB upgraders, ECs remain a highly compelling stepping stone. However, as market price levels continue to trend upwards, market timing will become increasingly vital.