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EC upgraders may take big loan hit
SAMANTHA BOH
464 words
11 December 2013
MyPaper
MYPAPR
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RECENT tweaks to the executive-condominium (EC) housing scheme will likely squeeze out home buyers who
fall close to or below the monthly household income cap to buy public flats directly from the Housing Board.
This refers to those who have a household income below $10,000 and aspire to buy an EC instead of a flat from
HDB.
One of the new tweaks caps the proportion of a borrowers gross monthly salary that can be used to repay an
EC loan to 30 per cent.
On the measure, Mr Mohamed Ismail, chief executive of PropNex Realty, said that it could cut the purchasing
power of upgraders by 50 per cent in some situations.
Mr Nicholas Mak, executive director at SLP International, said the move is an attempt by the Government to
discourage buyers from overstretching themselves.
With the implementation of the new mortgage-servicing ratio capped at 30 per cent, a household earning $8,000
can afford an EC worth up to $850,000, assuming it borrows up to 80 per cent of the ECs cost, he said.
With the prices of recent EC launches ranging between $800,000 and $850,000, buyers with a household
income lower than $8,000 might find themselves cash-strapped, he added.
The Ministry of National Development announced on Monday the 30 per cent cap, as well as a resale levy that
will be placed on second-timer applicants who purchase EC units directly from developers.
Cancellation fees for ECs were also cut from 20 per cent to 5 per cent of the purchase price.
Mr Ismail said the measures will also prompt developers to adjust their land-bid prices to take into account a
potential buyers purchasing ability.
He noted that implementing the new loan-repayment cap for ECs will make these units almost unreachable.
So, developers might build smaller units to maintain affordability for buyers and this may compromise a units
living space, he added.
However, DWG executive director Andy Choa said property developers should not be overly worried about the
new moves, apart from making minor adjustments to marketing costs and the duration of marketing efforts.
EC developers have healthy margins, so they can take a bit of heat, he said.
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On Monday, showflats for two EC developments Sea Horizon in Pasir Ris and Forestville in Woodlands
operated until 11.59pm, giving some home buyers the option to purchase a unit before the new repayment cap
kicked in yesterday.
samboh@sph.com.sg
LAST CHANCE: On Monday, the showflat for EC development Sea Horizon (pictured) in Paris Ris operated until
11.59pm, giving home buyers the option to purchase a unit before a new repayment cap kicked in yesterday.
Singapore Press Holdings Limited
Document MYPAPR0020131212e9cb00006
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