Always Remember Prices Are Always a Function of Supply And Demand. Photo by Morning Brew on Unsplash
I am sure you have friends, relatives informing you that executive condominiums are no brainers. If you can afford them and meet HDB’s requirements, you should go ahead and book a unit. However, nobody seems to explain the economics behind how these ECs appreciate over time. To help you understand, I will be going through the rationale of how this capital appreciation occurs. After all, price movements are a function of supply and demand.
To understand this appreciation, I have compiled a list of all the ECs launched to date. Since the usual graph (from 99.co) I use only goes back to 15 years, I am unable to show the data in that format. Instead, I will use just the latest single transaction (of each EC) and compare it with what the owners bought from day one. However, do take note that since only one transaction is used, the percentage may not reflect the representation of the entire development.
List Of Executive Condomiums And Their Price Appreciation
| Project Name | Location | TOP Date | Price Bought | Price Sold | Appreciation (%) | Transaction Date |
|---|---|---|---|---|---|---|
| Park Central Residences | Tampines Street 86 | TBA | NA | NA | NA | NA |
| Ola | 70 Anchorvale Crescent | 2023 | NA | NA | MA | NA |
| Parc Canberra | 1 Canberra Walk | 2023 | NA | NA | NA | NA |
| Piermont Grand | 22 Sumang Walk | 2023 | NA | NA | NA | NA |
| Rivercove Residences | 20 Anchorvale Lane | 2020 | NA | NA | NA | NA |
| Hundred Palm Residences | 260 Yio Chu Kang Road | 2020 | NA | NA | NA | NA |
| iNz Residence | 60 Choa Chu Kang Avenue 5 | 2019 | NA | NA | NA | NA |
| Northwave | 60A Palmer Road | 2019 | NA | NA | NA | NA |
| Treasure Crest | 50 Anchorvale Crescent | 2018 | $774,000 | $1,181,000 | 65.53% | July 2019 |
| The Visionaire | 170 Canberra Drive | 2018 | $957,000 | $1,088,000 | 13.69% | Feb 2020 |
| Sol Acres | 2 Choa Chu Kang Grove | 2018 | $783,000 | $962,000 | 22.86% | August 2019 |
| Parc Life | 21 Sembawang Crescent | 2018 | NA | NA | NA | NA |
| Wandervale | 351 Choa Chu Kang Avenue 3 | 2018 | $762,000 | $1,035,000 | 35.83% | August 2020 |
| The Criterion | 19 Yishun Street 51 | 2018 | $632,000 | $760,000 | 20.25% | June 2020 |
| The Brownstone | 150 Canberra Drive | 2017 | NA | NA | NA | NA |
| Westwood Residences | 180 Westwood Avenue | 2017 | $796,000 | $920,000 | 15.58% | May 2020 |
| Signature At Yishun | 21 Yishun Street 51 | 2017 | NA | NA | NA | NA |
| The Terrace | 88 Edgedale Plains | 2017 | $758,000 | $885,000 | 16.75% | Feb 2020 |
| Bellewaters | 11 Anchorvale Crescent | 2017 | $782,000 | $990,000 | 26.60% | August 2020 |
| The Vales | 79 Anchorvale Crescent | 2017 | $837,000 | $960,000 | 14.705 | April 2020 |
| Bellewoods | 100 Woodlands Avenue 5 | 2017 | $940,000 | $1,099,000 | 16.91% | March 2020 |
| Lake Life | 2 Tao Ching Road | 2016 | NA | NA | NA | NA |
| The Amore | 53 Edgedale Plains | 2016 | $793,000 | $928,000 | 17.02% | July 2019 |
| Sea Horizon | 1 Pasir Ris Rise | 2016 | $1,073,000 | $1,250,000 | 16.50% | May 2020 |
| Ecopolitan | 136 Punggol Walk | 2016 | $942,000 | $1,250,000 | 32.70% | August 2020 |
| SkyPark Residences | 1 Sembawang Crescent | 2016 | $1,013,000 | $1,190,000 | 17.47% | August 2020 |
| Lush Acres | 1 Fernvale Close | 2016 | $821,000 | $1,100,000 | 33.98% | August 2020 |
| Forestville | 48 Woodlands Drive 16 | 2016 | $809,000 | $950,000 | 17.43% | August 2020 |
| The Topiary | 11 Fernvale Lane | 2016 | $970,000 | $1,420,000 | 46.39% | August 2020 |
| Twin Fountains | 11 Woodlands Avenue 6 | 2016 | $803,000 | $918,000 | 14.32% | October 2019 |
| Citylife@Tampines | 57 Tampines Central 7 | 2016 | $677,000 | $835,000 | 23.34% | August 2020 |
| Waterbay | 45 Edgefield Plains | 2016 | $891,000 | $1,090,000 | 22.33% | March 2020 |
| Waterwoods | 15 Punggol Field Walk | 2015 | $1,044,000 | $1,098,000 | 5.17% | August 2019 |
| Heron Bay | 63 Upper Serangoon View | 2015 | $791,000 | $972,000 | 22.88% | August 2020 |
| 1 Canberra | 1 Canberra Road | 2015 | $911,000 | $1,180,000 | 29.53% | August 2020 |
| Twin Waterfalls | 11 Woodlands Avenue 6 | 2016 | $803,000 | $918,000 | 14.32% | October 2019 |
| The Rainforest | 331 Choa Chu Kang Avenue 3 | 2015 | $744,000 | $915,000 | 22.98% | August 2020 |
| The Tampines Trilliant | 21 Tampines Central 7 | 2015 | $711,000 | $915,000 | 28.69% | August 2020 |
| WaterColours | 25 Pasir Ris Link | 2014 | $604,000 | $715,000 | 18.38% | August 2020 |
| Blossom Residences | 30 Segar Road | 2014 | $723,000 | $870,000 | 20.33% | August 2020 |
| Arc at Tampines | 3 Tampines Avenue 8 | 2014 | $727,000 | $918,000 | 26.27% | August 2020 |
| RiverParc Residence | 90 Punggol Drive | 2014 | $780,000 | $970,000 | 24.36% | August 2020 |
| Belysa | 55 Pasir Ris Drive 1 | 2014 | $719,000 | $952,000 | 32.40% | August 2020 |
| Austville Residences | 11 Sengkang East Avenue | 2014 | $724,000 | $905,000 | 25% | August 2020 |
| The Canopy | 71 Yishun Avenue 11 | 2014 | $558,000 | $725,000 | 29.93% | August 2020 |
| Esparina Residences | 113 Compassvale Bow | 2013 | $789,000 | $1,140,000 | 44.49% | August 2020 |
| Privé | 37 Punggol Field | 2013 | $582,000 | $840,000 | 44.33% | August 2020 |
| La Casa | 64 Woodlands Drive 16 | 2008 | $433,000 | $840,000 | 94.00% | August 2020 |
| The Quintet | 36 Choa Chu Kang Street 64 | 2006 | $484,000 | $970,000 | 100.41% | July 2020 |
| The Esparis | 7 Pasir Ris Drive 4 | 2005 | $514,000 | $1,010,000 | 96.50% | April 2020 |
| Whitewater | 21 Pasir Ris Street 72 | 2005 | $431,000 | $812,000 | 88.40% | August 2020 |
| Park Green | Park Green | 2004 | $426,000 | $920,000 | 115.96% | July 2020 |
| Nuovo | 21 Ang Mo Kio Avenue 9 | 2004 | $609,000 | $1,430,000 | 134.81% | August 2020 |
| Lilydale | 550 Yishun Avenue 6 | 2003 | $458,000 | $830,000 | 81.22% | August 2020 |
| Bishan Loft | 31 Bishan Street 11 | 2003 | $558,000 | $1,480,000 | 165.23% | August 2020 |
| The Dew | 30 Bukit Batok Street 21 | 2003 | $520,000 | $1,228,000 | 136.15% | July 2020 |
| The Eden | 21 Tampines Street 34 | 2003 | $498,000 | $995,000 | 99.80% | August 2020 |
| The Floravale | 220 Westwood Avenue | 2000 | $463,000 | $863,000 | 86.39% | August 2020 |
| Woodsvale | 1 Woodlands Drive 72 | 2000 | $473,000 | $780,000 | 64.90% | August 2020 |
| Northoaks | 20 Woodlands Crescent | 2000 | $486,000 | $835,000 | 71.81% | July 2020 |
| The Florida | 78 Hougang Avenue 7 | 2000 | $605,000 | $978,000 | 61.65% | August 2020 |
| The Rivervale | 1 Rivervale Link | 2000 | $555,000 | $815,000 | 46.85% | August 2020 |
| Summerdale | 2 Boon Lay Drive | 2000 | $452,000 | $900,000 | 99.12% | August 2020 |
| Yew Mei Green | 50 Choa Chu Kang North 6 | 2000 | $503,000 | $850,000 | 68.99% | August 2020 |
| Pinevale | 2 Tampines Street 73 | 1999 | $607,000 | $940,000 | 54.86% | August 2020 |
| Chestervale | 43 Bangkit Road | 1999 | $646,000 | $1,060,000 | 64.09% | August 2020 |
| Windermere | 20 Choa Chu Kang Street 64 | 1999 | $609,000 | $860,000 | 41.21% | July 2020 |
| Simei Green | 1 Simei Street 4 | 1999 | $548,000 | $998,000 | 82.12% | Aug 2020 |
| Westmere | 71 Jurong East Street 13 | 1999 | $535,000 | $1,018,000 | 90.28% | July 2020 |
| Eastvale | 31 Pasir Ris Drive 3 | 1999 | $528,000 | $860,000 | 62.88% | June 2020 |
Just by looking at the data, you would be able to derive a conclusion by yourself. Nonetheless, we will still go through the observations and the explanation behind these numbers.
1. ECs Are No Brainers
From the very first EC launch to date, every single one of them has appreciated. It does not matter where or when you buy the EC. Be it in a new township or a mature estate, good times or bad times; prices will only go one direction. ECs are a class of product that is remarkably like BTOs. History has proven that you can close two eyes, pick a random one, and it will appreciate at the end of the day. So, if you are eligible for an EC and a particular one matches your requirements, you should give it some serious consideration.
2. Location Matters More Than Timing When It Comes to Price Appreciation
If you have read through some of my articles in this blog, I will always tell you that timing is not the most important thing when it comes to capital appreciation. Location and unit types are far more critical. Well, the same can be said for ECs as well. Although every single one of them goes up in value, some do much better than others. The only difference? Location.
3. Some ECs are Sold During MOP
You may be a bit puzzled as to why some ECs can be sold during the minimum occupation period (MOP). Unlike private condos or apartments, ECs are a hybrid form of public/private housing that requires the initial purchaser to fulfil HDB’s public housing requirement. One of these requirements is for the purchaser to physically stay inside the unit for five years before you can sell them.
Sales of these ECs before the MOP period are subjected to HDB’s approval, and there are a variety of reasons why this happens. Most of the time, it entails divorce cases where it is no longer possible to maintain a family nucleus – which is one of the key requirements to purchase an EC in the first place.
4. ECs Sold During MOP Does Not Appreciate as Much
While ECs sold during the MOP period may fetch a profit, this appreciation is still pale in comparison to those that have obtained MOP status. The reason behind this phenomenon is a simple calculation change in affordability. And the leading economic cause why their prices will only go in one direction.
Affordability Calculation Change
Whenever you apply for an EC (or purchase those still under the MOP period), the affordability calculator used is based on HDB’s Mortgage Servicing Ratio or MSR in short. In essence, this means is that you cannot exceed 30% of your monthly income to service your mortgage loan.
Executive Condominiums Initial Affordability Calculator-The Mortgage Servicing Ratio
Let us take an example of a young couple who has a combined monthly income of $14,000. Because this couple is young, the bank can give them a mortgage loan tenure for 30 years. Using the MSR calculation, a maximum amount of only $14,000 x 0.3=$4,200 per month can be used to pay for the house. In addition to the MSR, this young couple must also fulfil the Total Debt Servicing Ratio (TDSR) requirements of having an interest rate of at least 3.5% or the prevailing market rate, whichever is higher. After keying all these details into a mortgage calculator, they are now able to take a maximum loan of $935,318.94 with a property price of $1,247,091.92.
MSR Calculator. Input Monthly Debt Obligation, Loan Tenure, Interest Rate To Derive Loan Amount
Executive Condominiums Affordability After MOP- The Total Debt Servicing Ratio
However, after the EC has obtained MOP status, this affordability calculation will change from MSR to TDSR. For TDSR, instead of allocating a percentage of your income to the mortgage loan, the calculation takes an overall approach to the total amount of debt you have. In other words, you have more freedom to decide where your monthly debt obligations go. Some people prefer not to drive and allocate more funds to their housing. I will take the same young couple with an income of $14,000 and work out what they can afford in the resale EC market.
With the same income of $14,000, this young couple can now allocate a maximum of 60% debt obligation towards housing. The amount works out to be $14,000 x 0.6=$8,400. Using the same calculator, they are now able to take a maximum loan amount of $1,870,637.87 with a property value of $2,494,183.33. Thereby effectively doubling their affordability.
TDSR Calculator. Input Monthly Debt Obligation, Loan Tenure, Interest Rate To Derive Loan Amount
The Simple Reason Why ECs Appreciate In Price
After understanding the economics behind these ECs, I believe you now know why they are such no brainers. The increase in demand after MOP will only bring prices in one direction. So, the question is this, should this young couple go ahead and book an EC? Or should they buy a private condo because they can? Well, there is no one size fit all solution, and it all boils down to your requirements. To understand further, why not book a video call appointment with us and we will help you craft a solution to meet your needs. Meanwhile, stay safe, do your research, and always look at the numbers!
Article contributed by Jerry Wong.
Jerry Wong is a realtor with Propnex Realty. He loves coffee, cookies and condos and has been in real estate for ten years. Most importantly, he loves connecting people to properties and gets enormous satisfaction when they acquire their dream home. Or making well-informed decisions that see their assets grow. Book a video call appointment and Jerry will share with you the following.
- How certain factors affect real estate prices. Why some condos can make a million dollars while others can lose that same million.
- Why timing is not the most important thing. Because some people can buy the same condo at the same time, but one end up making $100k to $200k while the other suffers losses of the same amount!
- Understanding your requirements and craft a solution for your real estate needs. Be it in the form of asset progression, tax planning, financial calculations, rentals, sales, etc.
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