Resale executive condominiums gaining popularity

Transaction volumes and prices for such units on the rise as buyers search for cheaper alternatives

Feb 23, 2023

Christine Sun
Timothy Eng

RESALE executive condominiums (ECs) have been growing in popularity for their affordability. Many buyers have become more price sensitive amid interest rate hikes and rising macroeconomic uncertainties.

Resale ECs were cast into the spotlight as buyers priced out of the new sale market searched for cheaper alternatives. A post-pandemic surge in demand and scarcity of new home launches created an unprecedented price escalation. New condo prices, including those in the suburbs, spiked to record-setting levels last year.

ECs are usually priced lower than private condos due to the generous subsidies given by the government. ECs are a hybrid of public and private housing sold at lower prices than private condos, despite being built by private developers. An EC project is privatised 10 years after completion; thereafter, units can be sold to foreigners.

EC owners usually market their units at lower prices than private condos in the vicinity, since they were purchased at subsidised rates and non-privatised developments face certain selling restrictions.

Demand and price appreciation

According to Urban Redevelopment Authority (URA) Realis data, 2,005 resale ECs were sold in 2022. Although sales were lower than the 2,291 units transacted in 2021, they were at the second-highest level in the past 12 years and above the 10-year average of 759 units from 2012 to 2021.

Sales for 2022 were also higher than the transactions recorded in the pre-pandemic years in 2019 (783 units) and 2018 (657 units).

Prices climbed steadily through the years as demand for resale ECs continued to grow. From 2012 to 2022, the median price of resale ECs surged by 59 per cent from S$710 per square foot (psf) to a record high of $1,129 psf. The price gain was more than the 37 per cent increase for resale condos during the same period.

Year on year, the median price of resale ECs rose by 17.2 per cent from S$963 psf in 2021 to S$1,129 psf in 2022 – the highest annual increment over the last decade.



Reasons for popularity

Despite prices hitting new records last year, resale ECs are still cheaper than other private housing types.

In 2012, the per-square-foot median price of new condos was 63.4 per cent higher than resale ECs. The price gap between new condos and resale ECs widened to 98 per cent in 2022.

The price gap has grown as prices of new condos rose much faster than resale ECs. For instance, prices of new condos jumped by a whopping 92.7 per cent to a new high of S$2,235 psf from 2012 to 2022, while resale ECs rose by 59 per cent over the same period.

The price gap between resale condos and resale ECs is similarly substantial at about 48.2 per cent in 2012. However, the gap has closed over the years, and the price difference was about 27.6 per cent in 2022. For new and resale ECs, price gaps widened from 3.4 per cent in 2012 to 18.5 per cent last year.



Besides their affordability, resale ECs are favoured for their bigger living spaces. Of the 2,005 resale ECs transacted last year, 36.7 per cent of resale ECs or 735 units were between 1,200 square feet (sq ft) and 1,600 sq ft, while 3.9 per cent or 78 units were at least 1,600 sq ft. For the same size, condos and new ECs are substantially pricier. For instance, the median price of resale ECs between 1,200 sq ft and 1,600 sq ft was about S$1.4 million in 2022. Comparatively, a new EC or a resale condo of the same size was around S$1.8 million, while a new suburban condo in the outside of central region (OCR) was about S$2.3 million.

Most popular resale ECs

The most popular ECs with the highest transactions in 2022 were Bellewaters in Sengkang (135 units), The Terrace in Punggol (124 units), and The Vales in Sengkang (118 units). Three other ECs in Punggol and Sengkang, The Topiary, The Amore and Ecopolitan, were among the top 10 popular ECs.



There seems to be a correlation between estates having more flats reaching the five-year minimum occupation period (MOP) and a higher demand for resale ECs in the area. For instance, Punggol has the highest number of flats with completed MOP (20,590 units) over the past five years, followed by Sengkang (16,525 units), Yishun (13,620 units including Design, Build and Sell Scheme flats built by private developers), Bukit Batok (9,220 units), Sembawang (8,413 units) and Woodlands (8,132 units).

A surge in MOP flats probably led to more Housing and Development Board upgraders purchasing resale ECs, as 12 of the top 15 resale ECs were from these estates. Many flat owners probably prefer upgrading to a private home in the same area due to familiarity and social attachment.

Outlook

Demand will likely remain strong, as those who are not eligible to buy a new EC or wish to buy an affordable condo will turn to the resale EC market. However, some buyers may turn to resale condos if the price gap between resale ECs and resale condos continues to narrow.

There will be steeper competition for buyers in 2023, as over 11,000 new homes may be launched for sale from more than 45 projects. Around 30 per cent of the launches will be in the OCR, while 46 per cent will be in the rest of central region and 24 per cent in the core central region.

Two ECs at Bukit Batok West Avenue 8 and the adjacent plot at Bukit Batok West Avenue 5 may be launched this year. The Bukit Batok West Avenue 8 site, bought by CNQC-OS (2) (an entity of Qingjian Group) and SNC Realty (an entity of Santarli Construction) can yield about 375 units. The Bukit Batok West Avenue 5 site, bought by CDL Zenith, can yield about 495 units.

Demand for these two ECs is expected to be robust given the dearth of new EC supply in Bukit Batok and the high number of flats reaching MOP in the area.

Christine Sun is senior vice-president (research and analytics); Timothy Eng is assistant manager (research and analytics) at OrangeTee & Tie.