$900psf EC , cheaper than today's New Launches, ready for immediate occupation.

Some disclaimer, information below are my opinion derived from on the ground experience as a professional real estate agent, my personal experience and also from being a skeptic of daily marketing hype from developers.

Over the past 4-6 wks, I've received at leats 1-2 weekly enquiries from existing and potential clients regarding the upcoming EC launches in Sumang and Tampines Ave 10.

Now, personally I applied for a BTO 4 times. I applied with the Married Child Priority Scheme thinking I would get a favourable ballot number each time.

Tampines Greencourt , 5rm BTO @ $520k

Tampines Greencourt , 5rm BTO @ $520k

After 1.5yrs and on the 4th attempt, we got a decent 100 out of 500 ballot numbers. I started applying at the age of 29. At the age of 30.5yrs old, I got the ballot. The BTO was expected to complete by the time I turn 34yrs old. I would be able to sell upon MOP at the age of 39.

The BTO I applied for was $520k for a 5rm in Tampines.

After placing my initial deposit, buyers remorse started to sink in. The only real reason I took up that unit was because, after 3 failed attempts I was just desperate.

I convinced my fiance and we cancelled the BTO. I felt I'd be too old to work on our 2nd property if I will be 39yrs old after MOP.

Naturally she assumed I would be going for a new EC launch.

1 Year Time Bar by HDB. Then 5Yrs MOP lock in period.

1 Year Time Bar by HDB. Then 5Yrs MOP lock in period.

We were barred for 1 year to apply for any BTO or EC due to our recent cancellation but that was fine as the next EC launch was over a year to go.

But going for a brand new EC means the same thing, I have to ballot successfully, wait for the construction and MOP. By then I would be 40-42yrs old. Even older.

So I decided to take a break from house hunting for myself.

Then came in the EC enquiries from clients.

Usually us agents would be and should be excited with the prospect of being able to assist a client purchase an EC unit (hint: HUGE COMMISSIONS FROM DEVELOPERS).

Fact: Buying EC is not the same as BTO.

YOU NEED CASH ON HAND for deposit. 5% of purchase price to be exact.

How much will Sumang and Tampines Ave 10 cost?

Avg cost of $1100psf works out to be around $1.05mil 3bed similar to your 4rm BTO size (90sqm)

Now you need to be famliar with the loan structure here in Singapore. If you and your partner earns a combined income of $10,000/month. You will be cleared for a loan approval of

💵💵💵🔥🔥🔥

💵💵💵🔥🔥🔥

$600,000.

So you want to buy that 3bedroom 90sqm unit?

Purchase price $1.05mil minus
Loan $600,000
= you need $450,000 in CASH & CPF for your EC purchase.

Wait. What?

Uhhhhhhhh?

Close to half a million dollars needed to buy an EC?

What happened to buying Lexus at Toyota price analogy by Past Housing Minister Khaw Boon Wan?

If I were to reverse engineer the loan situation,

your $600k forms 75% of the maximum loan amount, then balance 25% or $200,000 is in Cash/CPF. This means you can afford to buy ~$800k max.

What can you get at $800k? ($800/ 1100psf = 67sqm) Even your 3rm BTO is bigger in size today.

Now, at the same time, I started meeting up with clients from Austville (Sengkang), Belysa (Pasir Ris) and Watercolours (Pasir Ris), Riverparc (Sengkang).

These are all ECs which have just reached their MOP. That means it's just been converted from EC status into Private Condo status.

But these projects are NOT YET full condo status. It's still considered to be Semi Private status.

-----What's the freakkking difference?

1. Foreigners can't buy these projects until they hit the 10th year mark. Singaporeans and PR CAN.

Should you care about this?

NO. Why? You need to know that foreigners need to pay 15% additional taxes in CASH to buy a private condo.

For a 1 mil Purchase, Mr Foreigner needs to pay $150,000 in cash to IRAS. If he has that amount of money lying around, do you think he will buy in Punggol or Tampines?

Or will he buy an investment property in Marina Bay, Orchard or Tanjong Pagar?

-------

So while everyone is suffering from tunnel vision and focused on the upcoming ECs,

I've made the decision to jump to personally buy one of the resale ECs. They are priced below $900psf (reminder, brand new EC is priced at $1100psf), they're bigger, and I don’t have to wait 3 years for it to complete. and I'm free to sell it anytime I want.

If prices double by next wk, I am not restricted at all. (If prices were to drop, I've made sure I have 7 years safety net to work with. Talk to me to find out how).

So for the same $10,000 income couple, how does it work for them if they were to buy a direct resale EC or full PTE condo?

Banks will grant them a loan approval of ~$1,340,000. That's way more than what they need.

For the same $1.05mil purchase.

They only need 75% of $787,500 loan - which is below their approval limit.

They need 5% cash - $52,500

They need 20% CPF - $210,000

Total of $262,500 in Cash/CPF.

——-

That's $187,500 difference needed to buy a brand new EC over a resale EC or PTE condo.

Gila kan?

So here are some units which are SELLING TODAY marketed by other agents in the market. (Photos are from Propertyguru.com , contact us to arrange to view)

They range from $830 - $1000 psf ($830k - $1.05mil).

Not in order of sequence:

  1. Austville Residence (Sengkang) - 1442sqft $1.3mil ($901psf)

  2. Austville Residence (Sengkang) - 1023sqft $1mil ($977psf)

  3. Belysa - 1055sqft $1.02mil ($966psf)

  4. Belysa - 1055sqft $950k ($900psf)

  5. Belysa - 969sqft $838k ($864psf)

  6. Belysa - 947sqft $860k ($908psf)

Options are everywhere, we just have to know where to look for them. These are just a handful of units I’ve brought my clients to view recently. Drop me a text if you’d like to view any of them. If you are keen to learn more about the ONLY Executive Condo Launch in 2019, click on the Piermont Grand EC Link to register. We are part of the marketing team. Rest assured you’ll get the best advise an upgrader can get.

Are ECs over hyped in 2019?

 With over 2,400 Executive Condominiums (EC) units expected to be launched in 2019/2020, interest in this unique property class has never been higher. After numerous proven cases of profitable purchases from past EC developments, many middle-class HDB home owners see an EC as the desired option in their property journey.

ECs are meant to serve the “sandwiched” class, who’s households monthly incomes of fall between $12,000-14,000 (too rich to buy BTO, but still find full private condo as a pricey option).

Definitely seen as a rarity in the property market, only 5 developer units EC remain unsold as of end 2018. The next EC launch is expected to happen in late 2019 in Sumang Walk. This low supply has bolstered confidence in developers to increase prices of previously unsold units. This has already been launched as Piermont Grand EC.

In Northwave EC, initial units were sold at launch in Jul 2016 for $779psf (a 2 bedroom 753sqft #14 floor unit was recorded as $587,000 - deal highlighted below)

northwave1.PNG

2 years later in 2018, developers sold another unit just 2 floors down at a significantly higher price of $645,000. These two units would have the same exact layout, same exact views. But the developers were able to make a $58k profit just by waiting 2 years.

northwave2.PNG

That is a close to 10% increase for the buyers who came in 2018.

Do note that every single one of the 2019-2020 EC launches were bought by developers at above $500psf ppr (PSF per plot ratio) to developers “aka - developer land cost” and prices for these ECs to simply breakeven would be at ~ $1,000psf range. That means the same 753sqft 2br EC sold in Northwave above would easily cost $753,000 today. A $166,000 or close to 30% increase in prices.

So the question now is, are ECs still a worthy option for HDB upgraders or First Timer buyers alike?

Looking back at the latest EC launches in 2017,

  • Hundred Palm Residences (Ang Mo Kio) sold out all 531 units on launch day.

  • Rivercove Residences was over 2.5x oversubscribed and sold out by end of 2018. (Rivercove was already selling at $976psf)

What about Resale ECs? Esparina Residences (Buangkok) and Prive (Punggol) ECs which have reach it’s 5yr MOP have already breached the $1,000psf mark easily.

Why do people bother with ECs? With so many restrictions for buyers (income, nationality, family nucleus), its as good as applying for BTO actually.

ECs will continue to be the affordable option if one wants to upgrade to a private property. In fact, first time home buyers will be given CPF Grants of up to $30,000, further enhancing the affordability of an EC.

It is also because of the very same restrictions, that ECs are able to be priced lower than its full fledged private counterpart just next door.

The highly anticipated EC in Tampines (expected early 2020) are surrounded by other private condos which have easily sold for $1,300-1,500psf. Not too long ago, these $1,300-1,500psf were the PSF values of prime freehold condos in East Coast :D

So even if the new ECs will be launched at above $1,000psf, they are still perceived to have strong value and affordability to many home buyers in future. Also take note that EC buyers are forced to wait out 7-9years before they can actually sell (2-3yrs for developement + 5yrs Minimum Occupation Period).

That means they are essentially riding out 2 private property cycles on average. This enables them to gain higher capital appreciation over close to a decade.

For clients who are interested in upgrading to an EC, source of funds for purchase deposit (25% of purchase price + ~3% stamp duty) plus the additional 2-3yrs wait for completion, hinders the aspirations for many upgraders. A tunnel vision towards a brand new EC further curbs their property progression.

Newly MOP EC, the best option a HDB upgrader has. Truly an undiscovered gem.

Is there a way to enter the EC wave without being hit by all these restrictions? Yes there is. What if you can buy into the EC or Private Condo market at below $1,000psf? That means you can get a 3bedroom easily for $800,000 to $900,000, and these units are barely 5 years old.

Yes there are such options, if you are still reading till this stage and you want to move up to an EC without paying the ridiculous resale levies and be stuck in the crazy logistics of selling and buying a new launch EC, drop me a text below through whatsapp and we’ll see what the best options are for you.

What Is Cash Over Valuation?

Buying a house with Cash Over Valuation (COV) basically means, the house that you are interested in has an official valuation of $500,000 but you just agreed to buy the house at $515,000 instead. Buying a house with COV happens almost exclusively with HDB Resale flats.

When you buy a flat direct from HDB (BTO Flat), the sold price will always match it’s valuation.

Take note that your CPF and/or Loan cannot cover the cost of COV.

Because when you buy a house for $515,000 (but valued at $500,000), you can only take a loan of up to 90% of the valuation amount and minimum 10% deposit of valuation amount by cash/CPF is required. That means:

  1. 10% Deposit : $50,000

  2. 90% Loan: $450,000

  3. Balance $15,000 HAS TO BE PAID in CASH.

Now when I first started in the industry back in 2009 and all the way till sometime in 2014, buying a house with COV WAS EXPECTED. Sellers and Buyers of resale HDB flats negotiated almost exclusively based on the COV amount, instead of the total selling price.

It came to a point where it was common to hear simple houses being transacted with $40,000-$60,000 COV.

Many felt home prices were running too far from what the average Singaporean could afford, thanks to rising COV cost. Then there were others who felt that, since resale market was a “Free Market”, sellers and buyers should have free reign to transact at any price they were happy with. Because if I want to pay the seller $40,000 cash over valuation, why should anyone stop me?

Home affordability became a very strong narrative in the 2011 General Elections, and years later (it probably wasn’t linked) new policies related to COV was released. It was a little complicated, but after getting the hang of it, it was actually quite a smart move by our policy makers.

Instead of allowing sellers to obtain their home valuation and subsequently asking for specific cash amounts over the valuation price, they required sellers and buyers to negotiate and sign off on a specific price before buyers could apply for valuation.

In fact, today, the only way for sellers to obtain a valuation of their flat, was to first sell off their flat to a buyer, and the buyer will scan the signed contract to HDB to prepare a valuation amount.

This is tricky becuase sellers and buyers are negotiating on a price without knowing what the valuation amount of the flat was. So an uninformed seller or buyer might unknowingly agree to transact a property for $500,000 when the value was only $450,000 - incurring $50,000 worth of COV.

What usually happens after this is, the buyer will simply walk away and forfeit his deposit.

Mr Seller: “What if I sold my flat for $500,000 , but the valuation turns out to be $510,000? Can I get the buyer to top up to match the value?”

Me: Since this new change was implemented, we’ve never seen a house that received a valued amount that was higher than the agree selling price. It almost ALWAYS matches the selling price. Even if you sold your flat at a weird $484,500 price tag, the buyers will receive a valued amount of $484,500 as well. It won’t be higher.

In the past, median COV prices were released so we could track the average market price for COV of a certain estate. By 2016, 80% of the HDB resale transactions were sold with NO COV. And as of today in 2019, COVs are becoming a rare occurance, unless a flat was grossly overpriced.

Mr Seller, would you want to sell your flat to a buyer, only to release 2 wks later they did not have enough cash set aside for the COV? The answer is No. That’s why we have to correctly price our flat according to the market rate, not to your own liking or based on some “news” your relative/neighbour/RC Member told you.

COV is rare, but is still around! Especially for high floor and super renovated unit, located in highly desirable locations.

Engage an experienced agent to avoid paying over $15,000-$25,000 of COV.