EC vs Condo. Which one to buy? What should you consider before buying? We will be walking through 7 main considerations to better assist in your brainstorming process.
Let us take a look at what is an EC first. As most of us know, Executive Condominiums (EC) are a form of subsidised housing. For us to qualify for a new EC, there are a few qualifying criteria:
- Buyers must qualify to purchase under any of the following scheme:
- Public Scheme
- Fiance / Fiancee Scheme
- Orphans Scheme
- Joint Singles Scheme
- There must be at least 2 buyers compromising of one Singapore Citizen and the other either a Singapore Citizen or Singapore Permanent Resident. Both buyers must be at least 21 years of age. If you are purchasing under Joint Singles Scheme, all buyers have to be Singapore Citizens. Both buyers must be at least 35 years of age.
- Total income should not exceed $16,000 income ceiling
- Buyers must not own any subsidised housing before or have only owned one subsidised housing thus far.
- Buyers must not own any private property or have not disposed of any within the last 30 months locally or overseas.
If you are eligible for a new EC, the next question will be whether should you be getting a new Executive Condominium or a new launched Private Condominium? Let us compare the difference now.
Many of a time, the location of a new EC may not be as premium as compared to a new launch Condo. If a good location is one of your preference, you may not be that incline to ECs.
“Perks” When Buying EC
If you and your co-buyer are first timers with a combined total income below $12,000, you may be eligible up to a $30,000 CPF housing grant when purchasing a new Executive Condominium. At the same time, priorities are also given to first timers with 70% of the supply set aside for them.
Whereas when purchasing private condominiums, you do not have these “perks”. There will not be any CPF housing grants as well as priorities given. However, you may enjoy early bird discounts if you are purchasing at the balloting stage of a new launch.
If you are a 2nd timer, one who previously owned a subsidised housing, you will not be eligible for any further CPF Housing Grants and resale levy will be applicable.
Difference in Holding Period for ECs & Condos
When you buy a new EC, you will need to adhere to a Minimum Occupation Period of 5 years from the Temporary Occupation Permit (TOP). Depending on the time of purchase, you may be required to hold the property for a range of 5 to 8 years (including construction lead time) before you are able to sell it in the open market.
In contrary, there is no holding period for a new launch private condominium. You can sell your private condominium anytime, except that there will be a Seller stamp Duty (SSD) of up to 12% of selling price incurred if the sales is within the first 3 years from signing the S&P agreement.
EC vs Condo Loan Eligibility
Loan assessments and approved loan amounts also varies for both property type. When purchasing a new EC, Mortgage Servicing Ratio of 30% applies which means that loan amount is assessed based on 30% of the buyers income.
For new private condominiums, loan is assessed based on Total Debt Servicing ratio of 60% of buyers income.
Technically, what this means is you will be able to loan double the amount when purchasing private condominiums.
Additional Buyer Stamp Duty (ABSD) For Condo
One of the main setback for purchasing a new launch private condominium instead of an EC for upgraders will be the Additional Buyer Stamp Duty (ABSD).
For example, if you already own a HDB and intending to purchase a new launch private condominium, you will have to pay for ABSD within 2 weeks from signing of the Sales & Purchase agreement.
Thereafter, you may apply for ABSD Remission after selling your HDB within 6 months after the issuance of Temporary Occupation Permit for uncompleted properties or execution of the Option to Purchase for resale private condominiums. Do ensure that all other remission conditions must be met as well.
In our scenario, since we are comparing on new launches, ABSD of 12% (for 2nd property) must be paid first and may only be refunded few years later upon TOP of the purchase. It might be a hefty sum to pay even though you can claim them back and it is especially so, if you require funds from your first property. You may have to make plans to sell your first property first, to avoid paying this ABSD. However, if you sell your first property first, you will be stranded to make alternative plans for stay during the transition period until your purchased property reaches TOP. i.e to stay with parents or rent a place for a few years.
If you are upgrading from a HDB to a new EC, you will not face this issue as ABSD is not applicable.
Generally, when you are purchasing a new launch, whether EC or Private Condominium, a more generic mode of payment will be the Normal Payment Scheme(NPS) or commonly known as Progressive Payment Scheme(PPS). However, for new launch ECs, there is another option available, the Deferred Payment Scheme (DPS).
As it’s name suggest, Progressive Payment Scheme is paid progressively along with the completion of stages of the constructions.
For buyers with limitations on their cash or CPF funds, they may opt for DPS whereby they will need to pay only 5% booking fee in Cash, another 15% upon signing the S&P in CPF/Cash as well as buyer stamp duty and legal fees. The rest of the payment (65% of the purchase price) will be deferred until the issuance of Temporary Occupation Permit (TOP) or in another words, when the keys are ready for collection.
Note: When purchasing under the Deferred Payment Scheme, the purchase price will be around 2% to 3% higher.
EC vs Condo Price (Entry Price) and Price Gap
An important deciding factor will be the comparison of the purchase price or entry price and pricing gap between a new launch EC and a comparable Condo.
Usually, ECs are launched typically about 15% to 20% lower in price as compared to new launch condos in the vicinity. No doubt, with the substantial price gap, ECs may seem more attractive in an entry price point of view.
Despite this, there are also various factors which may increase your purchase price (entry price) including the timing when you buy (i.e. during launch or after launched), the floor level, unit facing etc.
Depending on situations and choice of units, an EC’s potential may not be as feasible as a new launch condo unit if the price gap is narrowed.
Just for example, let us look at some past transactions recorded at the point of writing for both the EC and a Private Condominium launch around the area.
Lets us take a look at how the EC is performing. For the above Executive Condominium, average PSF price for this entire project documented was around $1179 psf in May 2021 and some of the transactions had went over $1200 with an extremely high PSF unit transacted at $1251.79 psf.
Now, let us take a look at the private condominium’s transacted prices. Average PSF was $1452 in May 2021 and the transactions prices for the 4 bedrooms $13xx to 14xx psf.
EC vs Condo In Our 4 Bedder Example Above
Some of you may have guessed which EC and Condo we are comparing above. For those who don’t know, *Drumroll* the transactions shown above are from Parc Central Residence (EC) and Treasure At Tampines (Condo).
So Which Is Our Pick? And Why?
With only a narrow price gap of approximately 10% to 12%, we will definitely go for Treasure At Tampines.
As the entry price is only at a tinge higher, we will recommend buying the condo instead of the EC due to various reasons below:
- Increased Opportunities. Since buyers can get double the loan amount when purchasing a private condominium, there is a good chance that even a single buyer is sufficient for the condo purchase. In this case, the other buyer’s name is free and can purchase another investment property without ABSD when the opportunity knocks.
- Shorter Holding Period. Purchasing the condo requires a shorter holding period e.g. 3 years vs 5 to 8 years for EC depending on the time of purchase.
- At a Better Location with more amenities.
- Lesser Surrounding Competition when development is ready to sell.
After going through the above pointers, you may already have a better grasp as to which is a more suitable purchase for you.
To sum it up, EC is definitely more suitable for own stay or as a form longer term investment with all the restrictions. Private condominium provides more flexibility as an investment (i.e. holding time, ownership structure).
Buying an EC may not always be favourable. From our example above, with the minimum price difference in mind, and after weighing and taking other factors into consideration, it seems more worthwhile to go for a condo instead of an EC.