Due to limited supply and rising demand, new EC prices have increased 24.1% since 2021: SRI

In the third quarter of this year, the difference in price between new and resale apartments also gets smaller.

November 7, 2024

CONDOsingapore.com

According to a market report by Singapore Realtors Inc. (SRI), executive condominiums (ECs) are becoming more and more expensive in Singapore due to their limited supply and rising demand from young families and those looking to upgrade their public housing.

According to the report, which was released on Thursday, November 7, the average cost of newly launched ECs for the first nine months of this year was S$1,460 per square foot (psf), which is 24.1% more than the S$1,176 psf price in 2021.

This year, slightly more than half of these recently introduced ECs were sold for more than S$1,500 psf. A nearly equal percentage, about 20%, were sold for between S$1,300 and S$1,400 and between S$1,400 and S$1,500. At less than S$1,300 per square foot, the remaining 8.8% of ECs were sold.

A 925.7 square foot apartment at Tampines' Parc Central Residences sold for S$1.6 million, or S$1,680 per square foot, in March, making it the most expensive transaction. According to Mohan Sandrasegeran, head of research and data analytics at SRI, that was the most expensive new EC unit price to date on a per square foot basis.

Sandrasegeran pointed out that these show an increasing inclination among EC buyers to invest at these price points, motivated by the projects' perceived worth and advantageous location.

"Strategic positioning, lifestyle amenities, and the distinctive features of ECs—which provide a mix of public and private housing—are becoming more and more important to buyers," he stated. "Even in an environment where price levels are rising, these factors contribute to the ECs' continued appeal."

He went on to say that it also shows how confident buyers are in ECs' potential for long-term value growth.

He attributed this to government rules that stipulate developers can only start selling EC units 15 months after the site is awarded or the foundation work is physically finished, whichever comes first. "The authorities maintain the long-term value and viability of ECs in Singapore's residential landscape by carefully regulating EC availability, which promotes steady price growth," he continued.

In the meantime, there has been a recent decrease in the price difference between new and resale ECs.

The price difference between new and resale apartments was only S$97 per square foot, or 6.9%, in the most recent Q3. In contrast, it was S$214 psf, or 14.4%, in Q1 and S$109 psf, or 7.7%, in Q2.

The five-year minimum occupation period for homebuyers, the 10-year period for a development to achieve privatised status, and the limited "active supply" of new ECs were all cited by Sandrasegeran as reasons for the closing price gap.

Regarding resale, in the first nine months of 2024, the demand for ECs that were ten years or older increased by 63.8% annually to 375 units. A more "modest growth" of 1.8% to 1,181 units was observed in the sales volume of ECs that were 10 years or younger.

As a result, in the first nine months of this year, the average price of older ECs increased 15.5% to S$1,171 psf, while the average price of ECs 10 years or younger increased 5.7% year over year to S$1,350 psf.

According to Sandrasegeran, buyers were probably drawn to established ECs that had already undergone privatisation.

According to him, these apartments might also be situated in "strategic locations within well-established neighbourhoods" that provide a convenient range of transportation options and a well-balanced assortment of amenities.

In general, he believed that because of their relative affordability, exclusivity, and potential for capital growth, ECs will remain a distinctive asset class that appeals to prospective homeowners.

He predicted that, like recent EC projects, prospective buyers would be very enthusiastic about new EC projects like Novo Place in Tengah. For example, Bukit Batok's Lumina Grand, which debuted in Q1, has already sold 426 of its 512 units, or 83.2%, at a median price of S$1,524 per square foot.