Tag Archives: EC

Almost 2,500 EC units sit empty

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.

Last quarter likely to be quiet

Prices of private residential property could show slowing declines in Q4 2014, especially for the mass-market segment, according to Knight Frank’s Director and Head of Consultancy and Research Alice Tan.

She predicts prices of non-luxury homes in Outside Central Region (OCR) to fall by another 0.5 to 0.8 per cent in Q4 2014, while prices in the Core Central Region (CCR) are expected to fall by another 1 to 2 per cent quarter-on-quarter. Meanwhile, prices in the Rest of Central Region (RCR) are expected drop by around 0.4 to 0.5 per cent from October to December.

The last quarter of the year is also likely to be a quiet period for project launches in view of the upcoming year-end holiday season. Tan said, “Going forward, the number of new unit launches could remain at current levels, with a marked fall in total number of residential units being made available under the H1 2014 GLS programme, of just 4,600 units.”

Additionally, volumes of the private residential property market are not anticipated to rebound strongly in Q4 2014, but HDB resale transactions may rise, according to OrangeTee.

“However, we expect resale volumes to continue to increase as more and more residential projects (BTO, EC and private) attain TOP and these buyers would have to sell their existing flats within six months, as some private property upgraders would sell to finance their upgrade and to claim ABSD rebate,” Steven Tan, Managing Director of OrangeTee.

By the end of 2014, 17,000 to 18,000 units are likely to be completed, according to JLL, and the supply in each of the next two years is expected to be around 20,000 units or more. “This will intensify competition in the leasing market and exacerbate the softening in rentals,” JLL said.