To complete the loop for a sustainable Executive Condominium (ECs) market, Ministry of National Development has introduced 3 primary measures to the EC segment, primarily:-
- Reduce EC Cancellation Fees – From existing 20% down to 5%
- Resale Levy for Second-Timer Applicants – Formerly second timers are not required to pay a levy. This is applicable to only new EC land sales which are launched on or after 9th December 2013
- Revision of Mortgage Loan Terms – From a previous mortgage servicing ratio (MSR) level of 60% to now 30% of a borrower’s gross monthly income. The MSR cap will apply to EC purchases from today onwards.
You can read more from the official source.
How will it affect the EC Market?
This will still primarily drive the 1st timers to purchase at ease and since they have lower cancellation fee, this would allow them to think prudently on their financing capability. Backing out would be less painful for them.
2nd timers would probably rush for existing EC launches prior before today so they would be able to avoid the levy. Again, these pool of purchasers would weed out in the market gradually.
EC developers would also be more careful when it comes to bidding for future EC land when it comes to affordability of EC purchasers since the MSR level came down drastically. We’ll see more competitive land bids for future plots; if not lesser.
Will it affect the Overall Market?
As of current, the primary indicator would still be HDB. With HDB prices tapering and aggressive supplies in the pipeline introduced by the government coming online, this would be the median basis of the fundamentals.
Prices should soften for the resale market for the next two quarters, as we’re experiencing a shift of tide already from the seller to the buyer’s market.
Whilst prices might soften, residential buyers should not expect a drastic drop in pricing as the rental market for residential segment is still active.