Media reports that have quotes some consultants have shown that close to 5,000 EC units could possibly be launched for this year, all coming from up to 8 new projects. It is felt this will worsen the already existing condition of unsold inventory build up.
It is expected that these Executive Condo units will have a lukewarm take up, more so when the room to adjust prices lower are limited for property developers for sites that were already purchased at a higher figure for Parc Life Sembawang.
Parc Life Sembawang Singapore
While this is happening, there are 2,100 units from 12 Executive Condo project launches that are still unsold. Data from URA indicates that the rate of vacancy for these completed EC units that are available for purchase has risen to 15.1% during 2015’s 1st Quarter, a figure that is up from 11.5% from the previous quarter on Parc Life.
SLP international’s executive director, Nicholas Mak, has stated that the Executive Condo market can be compared to someone drowning at sea with two weighty milestones on Parc Life EC hung about their neck, meaning the MSR (mortgage servicing ratio) restriction and HDB seeing resale prices falling.
Parc Life Singapore
Mak further adds that a third milestone, the upgrade resale levy, will be what seals the EC markets fate.
Ong Teck Hui, the national research director for JLL, pointed out that EC units’ affordability has been lessened by the MSR, as well as restricted the eligible buyer pool, all resulting in a much lower demand and EC project take up rates for Parc Life.
As explained by consultants, the TDSR, or total debt servicing ratio, has capped borrowers’ outstanding liabilities at 60% of their gross monthly wages, making redundant the 30% MRS for Executive Condo units that are bought via developers. Furthermore, a peculiar situation has developed via the MSR where EC units have been made less affordable due to buyers being able to get a higher loan quantum on a private condo than they would for an EC unit.
Further adding to this is the fact that there is a 15 month wait period that EC projects are subject to that starts from the date that the site is acquired to the actual date of launch. Before this, EC projects were able to launch as soon as 6 months from the acquisition date of the site.
Parc Life EC
Eugene Lim, the key executive officer for ERA Realty, has stated that many consultants took note of how drastically market conditions can change during any waiting period on Parc Life. It is extremely hard for a developer to deal with these changes once the plans for a building are finalized for Parc Life.
Mak added that a potential buyer could suddenly have an increase in their salary during this 15 month wait time that would then disqualify them from being able to buy an Executive Condo unit altogether, because their household’s gross monthly income cannot be more than $12,000.
Lim feels that because of this, it may be better idea to match up the rules for EC unit loans with those used for private properties. Ong on the other hand feels that now would be timely for reviewing the waiting period of 15 months if the moderation of the bids for Executive Condo sites continues.