Raised income ceiling a chance for developers to clear unsold ECs: Analysts

More Singaporeans will be able to apply for new Housing and Development Board (HDB) flats and Executive Condominiums (ECs) now that the income ceiling for buyers has been raised to S$12,000 for new HDB flats, and S$14,000 for ECs.

While the HDB is expected to be cope with the new demand, industry-watchers said that with close to 3,000 ECs in the market still unsold, this is an opportunity for private developers to push EC sales.

With the next HDB Build-to-Order (BTO) exercise scheduled for September and more Singaporeans now able to join the queue, National Development Minister Khaw Boon Wan said he is positive HDB can manage any change in demand. He added that the change will not edge out the lower-income families, or those who really need a flat.

“We have leverage over the supply and we can always adjust the supply – expand or reduce – as necessary,” said Mr Khaw. “I was not able to do this adjustment, let’s say three years ago, because at that time we were still clearing the queue for the BTO.

“So I think if we were to do this significant ceiling adjustment 2.5, 3 years ago, the concerns expressed would be very valid. But now that we have cleared the queue largely, I think it’s as good a time.”

Meanwhile, those earning more than S$12,000 but who are still within the new cap of S$14,000, can now consider buying ECs. Observers are watching to see whether the new cap will prompt a hike in prices.

However, key executive officer at ERA Reality Eugene Lim said that rather than increasing prices, developers would likely concentrate on sales. “They will try to use this opportunity to clear up whatever stock that has been launched, and focus on the upcoming projects which are all lined up to be launched in the market.”

“So as to whether prices will eventually increase, I think we still need to monitor the market for a good three to six months before we can come to a conclusion,” added Mr Lim.

As of last month, about 2,900 EC units remained unsold. There are also more units in the pipeline, with as many as four projects expected to launch later this year.

“There have been so many ECs in the pipeline that if I were an EC developer – I am not, but if I were – I will think three times when you think about adjustment. If anything, I think many of them are thinking of adjusting downwards.”

The last time the income ceiling for new HDB units and ECs was raised was more than four years ago in 2011. The Ministry of National Development and HDB said more than 21,000 families have benefitted from that revision, including buyers of new and resale HDB flats, and ECs.

Source : Channel NewsAsia – 24 Aug 2015

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