EC OR CONDO? WHICH ONE IS BETTER?
How often we heard people talking and asking about this?
Today if someone asks you this question, what would your answer be?
Many home buyers, be it a first-timer or a home upgrader have been comparing these two but yet still unable to decide, which one is better for them?
People have the tendency to make comparison when buying things, especially when they share too many similarities. Who doesn’t want to get the best option anyway? However we often forget or rather neglect the fact that, the best for others may not be the best for us.
How is that so? We all have different circumstances, be it in family, financial, need or future plan. Therefore it is wiser to ask ourselves instead, which one is more suitable for me?
Buying a property means committing ourselves to a very long term mortgage and it often makes us worrying too much, especially Singapore is known as one of the most expensive places for property in the world.
It is no wonder that ‘the best for me’ is often translated into ‘the cheapest for me’. Not just expected to be the cheapest, it must also be something with fastest and highest capital appreciation.
On the contrary, it also could be harder to make a choice when we are in a situation whereby all options are possible as our finances allow us to go further. Therefore it is essential to study the similarities and differences of each product to see more precisely on what they can offer.
Let’s explore and get to know the characteristics of both EC and Condo to help ourselves find the most suitable option, rather than just knowing ‘which one is better’.
EXECUTIVE CONDOMINIUM (EC)
EC is a hybrid type of housing.
It is a mix of public and private housing which was introduced by the government in 1999 to replace the former Housing and Urban Development Company (HUDC) flats.
Holding a status as public housing when first launched, EC requires its applicants to comply with HDB’s EC schemes. They need to firstly check on their buying eligibility which we will cover in the later part.
EC is built to cater the ‘Sandwich Class’.
This type of property is meant for people of the middle class income who are ‘too rich’ to buy HDB flats but ‘are not rich’ enough to buy private properties or condos yet.
This group is considered as ‘too rich’ because their household incomes exceed the public housing monthly income ceiling but still, are having difficulties in financing private properties.
What makes EC attractive?
- ECs are the only type of housing in Singapore which are built by private developers with full suite of condo features and facilities but first sold as public housing via HDB.
- ECs have the condominium façade and facilities but their prices are 20-30% cheaper than private condos. This ‘saving’ comes from the government who subsidies the land costs of these projects.
- EC can be considered as a short cut to become a condo owner. Though EC starts as HDB property but after 10 years, the EC status will be fully privatised which means it is automatically upgraded as a private property.
- One of the perks of first being sold under HDB policies is, you can apply for CPF Housing Grants, depending on your eligibility.
- When the 5-years MOP is fulfilled, EC owners can unlock the value of their ECs through an equity term loan at a desired time if they wish to invest in second properties.
- EC is a better investment because after 10 years, selling EC will not be bound by HDB restrictions anymore. This means it will open up to a wider range of prospective buyers where foreigners or companies become eligible buyers.
- After privatisation, the price gap between ECs and Condos will be narrowing down significantly. A recent study & research by ‘Squarefoot’ revealed that the price difference is around nine (9) percent after the Minimum Occupancy Period (MOP), then further down to five (5) percent after being fully privatised.
Despite being attractive ECs also have some restrictions
As mentioned earlier, starting as public housing requires EC buyers to observe some restrictions set by HDB:
- Meet the HDB’s eligibility criteria
- Buyer must form the Family Nucleus as required under HDB’s EC rules.
- Buyer must be at least 21 years old OR 35 years old under Joint Singles Schemes.
- One of the buyers must be a Singapore Citizen, with co-buyer or co-applicant from a family member who must be also a Singapore Citizen or a Permanent Resident.
- A single alone is not eligible to buy EC during its first launch. Singles need to partner with up to 3 other co-applicant singles (unmarried, divorced or widowed) under HDB’s Joint Singles Scheme. All must be at least 35 years old and are Singapore Citizens.
- Buyers and their families’ combined income should not exceed S$16,000 per month.
- Buyer, co-buyer or essential occupant (if any) must not have any other property in Singapore or overseas, and have not sold such a property in the past 30 months.
- Observe and fulfil the 5-years MOP as required in HDB BTO and Resale flats. EC owners are allowed to sell their units once the MOP is up, but limited to Singapore Citizen and Permanent Resident buyers only.
- Buyer, co-buyer or essential occupant (if any) who had previously bought government subsidised housing such as BTO, DBSS or a new EC unit, will need to pay Resale Levy. This levy is applicable to EC launched since 9 December 2013.
- During the developer’s new launch period approximately 70% of EC homes will be allocated for first-timers, such restriction does not apply to private condos.
- Though ECs are first considered as public housing but its buyers are not eligible to loan from HDB. They can only loan from banks with both Total Debt Servicing Ratio (TDSR*) and Mortgage Servicing Ratio (MSR**) applied.
Condo or Condominium is a private residential development that comprises a collection of housing units with exclusive features and facilities like 24/7 security guards, swimming pools, tennis court, gymnasium, barbeque area, landscaped areas, clubhouse and many more.
In Singapore, to fit as a condo, the project or development must have a site of at least 4,000 square metres.
the most expensive option.”
Living in a condominium is more than just owning a property.
It also reflects luxury and opulent lifestyle which explains why among other type of private properties, condo is regarded as the most popular and prestigious. Simply because, it is the most expensive option of property and naturally, not everyone can afford it.
Some benefits mostly found only in Condos:
- Better locations
Compared to ECs which are usually located at ‘ulu’ locations, Condos on the other hand are more likely located at prime locations, with better amenities available such as MRTs, schools or malls.
- All ECs are 99-year lease
But private condos can be either 99-year, 999-year or even Freehold.
- Not restricted by income ceiling
This is because, no government subsidy given to this development.
- Not restricted by 5-years MOP
Condo is designed not just to serve as a home but also as investment options. For this reason condos have the freedom to rent or sell in the open market immediately.
- Anyone can buy as long as they can afford it
From the beginning a condo is privately owned, as such it can be sold not only to Singapore Citizens, but to Permanent Residents and Foreigners as well.
- No restrictions on owning multiple properties
Condo owners are allowed to purchase second or more private properties either in Singapore or overseas.
- No restrictions on property ownership
You are not required to sell your HDB flat while buying a condo. You actually can keep them both.
“All ECs are 99-year lease,
but private condos
can be either
Having better knowledge on ECs and Condos now, but still uncertain?
If the feeling comes from being financially insecure, the best advice for you then is to seek for banker’s assistance.
Start to shortlist your preferred bankers for loan assessments. If eligible, usually within 1 or 2 days the bankers can come up with verbal approvals informing the loan amount you can get.
Within up to 2 weeks time later, you will also receive the official ‘Letter of Offer’. Once this is settled you would have a clearer picture of what option would mostly suit you best. The certainty of how much you’ll have in hand is automatically helping you in choosing a direction.
On a side note, keep yourself updated with what is happening in the market recently. Today when everything is just one click away, we could easily do some simple search online to see what the current trend is.
Above all, you can do your own self assessment by answering these:
- What is the main purpose of your purchase?
- What is your plan in the next 5 – 10 years?
- How is your financial position in the present time and a few years later?
So, what is the conclusion?
If your objective is purely on capital gains, buying condo is the best option as unlike ECs, these developments are not bound by any restrictions.
Condo gives its owners the freedom to buy or sell at their desired times, especially at times when market is on their side. This ‘privilege’ helps Condo’s prices to be proven to appreciate the fastest compared to ECs or even HDB flats.
However, if you have all the time and patience, EC could be a relatively great bargain, both in terms of living and capital gains.
Hope you find this article is useful and ultimately, when you buy for your own stay it is more important to buy what you like.
*TDSR Home buyers can only loan up to 60% of their gross monthly income. All outstanding debts like car loans, credit cards and other personal loans are taken into consideration when computing the cap.
**MSR The monthly repayment for the housing loan should not be exceeding 30% of your monthly household income. Besides, the maximum loan tenure must not go beyond 30 years.
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Lina Halim is on a mission to assist you in reaching your real estate goals.
As a Senior Associate Director with OrangeTee & Tie Pte Ltd, she takes the time to listen and understand your unique needs, only to plan and tailor a custom strategy that will help you acquire the specific property assets.
Never a fan of high pressure tactics, Lina centers her business on being committed, sincere and genuine with her clients.
She uses her real estate experience and property market knowledge to scope out only the most fitting opportunities for her clients.
Be it a need to get the right buyer or seller, she always put the client’s interest and ultimate goals as her priority.