After slipping to 11.5 percent in Q4 2014, the vacancy rate in the executive condominium (EC) market started to increase again in the first quarter of this year to 15.1 percent, according to data from the Urban Redevelopment Authority (URA) and reported in the media.
In fact, there are 2,446 vacant EC units in the market. These refer to completed units that were not sold or units which have been acquired but were left unoccupied by owners – probably because they need more time to move in.
Usually, ECs attract HDB homeowners looking to upgrade their homes. They account for about 50 percent of those buying ECs. HDB rules give these upgraders six months within which to sell their current flats, after collecting the keys to their new units.
But given the falling resale prices of HDB flats, more EC buyers are finding it harder to sell their units.
As a result, HDB is seeing more requests for extension.
Last year, it received a total of 56 extension requests from EC buyers, which works out to an average of 14 requests per quarter. But in Q1 2015, the housing board received 29 such requests.
Nonetheless, the rising vacancy rate may also suggest that the EC market is attracting investors since most EC projects were fully sold, said property firm Century 21.
“We also sense that there are many who are investors in ECs, they are not buying the ECs because they want to live in it. They are buying the ECs for probably a financial investment motive and having taken the keys. They are probably still staying with their parents or they are staying elsewhere and they are not moving in,” said Ku Swee Yong, chief executive officer of Century 21 Singapore.
Although ECs are developed and sold by private property developers, buyers can still receive a maximum grant of $30,000 per household. After 10 years, these units become privatised and can be sold to foreigners.