Falling prices in the HDB resale market has resulted in more vacant Executive Condominiums (ECs), according to Century 21’s Chief Executive Ku Swee Yong in a media report.
At the end of September, there were 14,624 completed ECs, of which a total of 2,941 units came from six projects completed in the first three quarters of 2014. However, 16.2 percent or 2,375 units out of the overall figure were vacant, he said.
This means 2,941 ECs were added this year, but the number of vacant units significantly increased to 2,375 in Q3 2014.
“One reason for the slow take-up of ECs despite the Minimum Occupation Period (MOP) is that upgraders and second-timers are finding it challenging to sell their current HDB flats,” he said.
“Four years ago, when these ECs were launched, a typical plan for upgraders was to buy the EC — many on deferred payment schemes — in the expectation that HDB resale prices will rise during the time that the new home was being built.”
By the time the ECs were completed, they thought they could gain a sizeable windfall from the sale of their HDB flats, which could be used to pay off a portion of the loan for the EC unit.
“However, the tide has turned against them. HDB resale prices have dropped for the past five quarters and recent changes to valuation rules and to purchases by Permanent Residents have made it even tougher to sell the current units at market prices,” Ku explained.
While some HDB sellers, especially upgraders, accepted below-market prices, some are still waiting for better offers. However, there are some who postpone collecting their EC keys as they hold out for better prices.
“So, in the EC segment, potentially about 2,300 families concurrently own two taxpayer-subsidised housing units: the HDB flat that they currently own and possibly occupy, and one completed EC that they have yet to move into,” Ku said.
Because each family can only posses one subsidised home under the law, upgraders are compelled to sell their HDB flat as quickly as possible. “The pressure to sell may worsen, with EC completions expected to total 2,854 next year, 6,371 in 2016 and 2,505 in 2017,” he added.
Muneerah Bee, Senior Journalist at PropertyGuru, edited this story. To contact her about this or other stories email muneerah@propertyguru.com.sg
Source: PropertyGuru (7 Nov 2014)