Executive Condo (EC) VS Resale Condo: Differences and Cost!

In Singapore, one of the big decisions among first-time home buyers is choosing between a private condominium and an executive condo (EC). Both property types are highly sought after and becoming increasingly popular in today’s real estate market.

While both these housing options are somewhat similar in the context of convenient locations and modern facilities, it is easy for homebuyers to get confused.

This article will highlight the similarities and differences between the two kinds of residential properties and help you decide which is a better option for you.

WHAT IS THE DIFFERENCE BETWEEN A PRIVATE CONDO AND AN EXECUTIVE CONDO?

Most people don’t know of any differences between these two housing options, apart from the obvious cost disparities.

Interestingly, private condos and ECs have a lot of similarities. Both these residential housing options are marketed and sold by private developers and offer similar facilities such as swimming pools, landscaped areas, tennis courts, gyms, 24/7 security, etc.

Only when you understand the features and characteristics of executive and private condos, you can choose the one that fits your needs.

WHAT IS A PRIVATE CONDO?

While nearly 80% of the resident population in Singapore reside in affordable public housing administered by the HDB, the remaining live in privately-owned residential properties, for example, private condominiums.

A private condominium or condo is a type of privately-owned housing where the buildings or blocks contain numerous residential units. Unlike public housing, private condos offer access to additional facilities such as a pool, gym, garden, clubhouse, round-the-clock security and more. Each condo development is responsible for its own upkeep.

WHAT IS AN EXECUTIVE CONDOMINIUM (EC)?

At the first glance, Executive Condos (ECs) look similar to private condominiums and come with comparable facilities and designs.

ECs are a form of hybrid housing that was first introduced by the government in 1999. This public-private type of housing caters to the aspirations of the “sandwiched” class Singaporeans looking for an affordable middle ground between HDB housing and fully-private condominiums.

These are for people who earn a little too much to qualify for public housing (HDB flats) but not enough to buy a private condo!

Once the EC owners fulfil the Minimum Occupation Period (MOP) of 5 years, they can sell their house to Singapore citizens and permanent residents (PRs).

An executive condo counts as an HDB property for the first 10 years. After the first decade, an executive condo ‘magically’ transforms into a fully private property, which means they are no longer constrained by HDB rules. It generally has a leasehold tenure of 99 years.

ELIGIBILITY TO BUY AN EXECUTIVE CONDO

Since an EC starts as public housing, the buyers must comply with the following terms & conditions set by the HDB:

Family nucleus

You can apply to buy a new EC under one of the following eligibility schemes:

• Public Scheme
• Fiancé/Fiancée Scheme
• Orphans Scheme
• Joint Singles Scheme

Citizenship

• At least one of the applicants needs to be a Singapore Citizen (SC), with the other being an SC or Singapore Permanent Resident (SPR).
• Both applicants must be SC if they are buying under the Singles scheme.

Income

• The monthly household income must not exceed $16,000.

Property ownership

• Buyers must not have owned or disposed of any private property within the last 30 months.
• Buyers must not have bought more than one HDB, DBSS or EC flat previously.

PRIVATE CONDO VS EXECUTIVE CONDO – DIFFERENCES

Choosing between a private and an executive condo could be a real dilemma for those who can afford both housing options! Let’s look at the table highlighting the key differences between the two types of properties.

Executive Condominium		Private Condominium
Public for the first 10 years	Public or Private	Private
Up to 25% – 30% cheaper than private condos	Price	More expensive than HDBs and ECs
99 years only	Lease	99-year, 999-year or even freehold
Fewer, only about 1 to 2 per year	Launch frequency	More, over 20 launches per year
Deferred payment scheme still available for some developments	Payment schemes	Progressive payment scheme
No renting out parts/full unit; Owner-occupation only	Occupancy	For owner-occupation or investment
5-year MOP before owners can rent out or sell the entire unit	MOP	No MOP required; sell or rent any time after purchase
New ECs: strictly Singaporeans only; 6-10th year EC: Citizens and PRs; After 10 years/fully privatised EC: Foreigners and everyone else	Purchasing eligibility	No restrictions on foreign ownership, foreigners may also buy
Monthly income must not exceed $16,000	Income ceiling	No maximum income ceiling
Yes (first-timers only); Up to $30,000	Housing grants	No grants available
Must not have owned other properties or disposed of any within the last 30 months; Must not have bought more than one HDB, DBSS or EC flat previously	Property ownership	No restrictions on ownership of other properties
Both MSR and TDSR will apply when applying for home financing	Home loan	Only TDSR will apply when applying for home financing

WHY DO PEOPLE BUY EC?

Buying an EC presents the middle-class “sandwiched” Singaporeans with the best of both worlds. It offers an attractive combination of subsidised pricing of public housing and the quality of life in a private condominium. When a buyer purchases an EC during its launch, it is like buying a government-subsidised property with all condo-like facilities at a discounted price!

Although executive condominiums are built and sold by private real estate developers, the Singapore government subsidises the land cost. This is why ECs are generally 25% to 30% more affordable than private condos of similar size and location.

For example, a 2-bedroom EC unit costs about $650,000 and a 3-bedroom EC unit can be up to $800,000. In comparison, a 3-bedroom private condo can easily fetch around $1.2 million. If you are seeking a property below $1 million, an executive condo is a better choice to start looking!

On top of that, it makes sense for first-timers to go for an EC before making their way to private housing as they may also be eligible for CPF housing grants ranging from $10,000 to $30,000.

Average gross monthly household income	Singapore citizen (SC) household	SC/Singapore Permanent Resident (SPR) household	Half-housing Grant
$10,000 or lower	$30,000	$20,000	$15,000
$10,001 to $11,000	$20,000	$10,000	$10,000
$11,001 to $12,000	$10,000	Not eligible	$5,000
$12,001 to $14,000	Not eligible	Not eligible	Not eligible

With the lower price point and potential housing grants, more Singaporeans may be able to afford to buy an EC over a private condo. The only caveat is the EC buyer’s monthly gross income should not exceed $16,000.

IS IT REALLY WORTHWHILE TO BUY AN EXECUTIVE CONDO(EC)?

An executive condo is regarded as a value buy as you can enjoy the perks of living in a private property at a subsidised price. It is also cheaper than its private counterparts with similar locations and amenities.

While lower price and the 10-year privatisation rule are two obvious benefits of choosing an EC over a private condo, some EC buyers are also confident that the fully privatised ECs have more potential for capital appreciation than private condos.

Looking at the historical data from 2002 to 2012, we will see that private condos have appreciated better than ECs in general.

However, from 2012 to 2022, ECs have seen a higher capital appreciation. According to the data shown in the image above, ECs have seen a 53.16% increase in price — higher than the price increase of 47.85% for condos.

Therefore, we can say that once the EC hits the MOP and become fully privatised after the 10th year, the capital gains are generally higher than the resale private condos.

WHEN IS BUYING AN EC NOT BE A GOOD IDEA?

Even though executive condominiums are considered HDB properties in the first 10 years, you can finance them only through a private property loan (instead of an HDB loan). That means EC buyers can borrow up to 75% of the property price from the bank and then make a downpayment of the remaining 25% (5% of which must be paid in cash).

In addition to the Total Debt Servicing Ratio (TDSR), there is an additional Mortgage Servicing Ratio (MSR) rule for ECs. When buying a private condo, you only have to consider your TDSR. TDSR indicates the money from your gross household income you can use to pay all your debts.

For ECs, the borrower must also factor in the MSR of 30% when taking up a home loan. It shows that financing an EC may require higher earning power than affording a private condo.

IS IT GOOD TO BUY RESALE EC?

Buying a resale EC from its owner guarantees that it has completed the MOP and is either fully privatised or closer to full privatisation. Thereafter, the buyers of resale ECs no longer have to wait to fulfil the MOP. This will be more important to those who intend to sell – now or in future. Remember that if the resale EC has served its 5-year MOP, the buyer has to be a Singapore Citizen or Singapore PR.

All restrictions are lifted from the EC unit after 10 years and onwards. It will be treated as a private condo that can be sold to foreigners and everyone else, including companies in Singapore. Also, the resale ECs are usually move-in ready!

However, remember that resale ECs demand at least a 25% downpayment and are not entitled to any housing grant. So, be ready to have cash or CPF funds in your account.

Note: If you already have an EC and want to sell it, prices usually go peak between the 8th and 10th year.

IS IT WORTH BUYING PRIVATE CONDO IN SINGAPORE?

Private condos offer more flexibility in buying and selling.

Executive condos can be purchased if the buyers meet certain eligibility conditions. However, no such restrictions apply to regular condos.

When selling a regular condo, you have to pay the Seller’s Stamp Duty (SSD) tax that applies during the first three years. But from the fourth year onwards, you can sell the private condo anytime you like without penalty.

ECs must adhere to the MOP of 5 years to sell or rent out the whole condo unit. Moreover, the MOP for EC begins from the time of the development’s TOP (Temporary Occupancy Period).

The 5-year MOP for ECs is still two years more than the duration you need to pay the stamp duty for a regular condo. Also, a private condo can be a better choice if you are looking to collect rental income sooner.

In most cases, the psf prices of the ECs remain largely stable after they become fully privatised after 10 years. On the other hand, the psf prices of resale condos continue to grow with time. The psf difference between fully privatised ECs and resale condos in their respective districts can differ by 37% to 50% from the 11th year onwards.

So if you are planning to buy a property for investment purposes only with the intent of selling it in the future, a resale condo will always be the better bet as they tend to see more capital appreciation in terms of absolute psf prices.

Therefore, consider buying a regular condo if:

• Your purpose of buying the property is only investment.
• Your financial situation can be a bit volatile in the next 5 years.
• You are not sure if you want to hold on to the property for 10 years or more.

WHY IS EC CHEAPER THAN A CONDO?

Executive condos provide a cheaper alternative to private condos for two reasons:

Firstly, ECs are usually built at less accessible locations, like in non-matured estates keeping costs low compared to private condos. ECs are generally further away from existing MRT stations and malls, mostly located in Singapore’s Outside Central Region (OCR).

Secondly, the government subsidises the land prices for executive condos. This is why ECs are typically cheaper than their private counterparts at launch.

Moreover, as discussed, the government allows EC buyers to take advantage of certain CPF housing grants, such as the Family Grant and the Half-Housing Grant.

CAN I OWN BOTH EC AND CONDO?

Yes, you can purchase a private condo once you have fulfilled the MOP of 5 years for the EC unit directly purchased from the developer.

Note that if you have any outstanding home loan for your existing EC, you can get a maximum loan to value quantum of up to 45% for the second property. With no outstanding loans, you will be eligible for 75% of the property value. Plus, you will be subject to an ABSD of 17% for your second residential property as a Singaporean citizen.

CAN I BUY EC AFTER SELLING A PRIVATE PROPERTY?

If you or your family members – to be listed as co-owners –  already own a private property in Singapore or overseas at the time of EC application, then you are not eligible to buy an EC unit. You can only apply for an EC unit after 30 months from the date of disposal of your private property.

FACTORS TO CONSIDER WHEN DECIDING BETWEEN AN EC OR A PRIVATE CONDO

If you are an HDB upgrader who wants to own a non-landed private property at a good price, you might be confused about whether to upgrade to an EC or a private resale condominium. Executive condominiums are an attractive choice for HDB upgraders for their affordability and investment potential. Here are a couple of pointers to look into:

No ABSD

When upgrading to an EC, you don’t need to pay the ABSD even if you buy the EC before selling your previous flat. However, you would have to pay the ABSD (12% for SC or 15% for SPR) on your private condo if you purchase the condo first and sell the flat after moving in. It is because you are now buying the private condo as your second property at the time of purchase.

Although you can apply for ABSD remission later (if eligible), managing enough funds for both downpayment and the ABSD can be stressful to some buyers.

Lease issues

Do you intend to hold your condo for the long term? If you are considering the condo as part of your retirement planning, you are more likely to own freehold units.

An executive condo is a 99-year leasehold condo (like your previous HDB flat). However, private condos can be 99-year, 999-year, or freehold properties. This makes private condos the preferred choice among some buyers and investors.

FINAL THOUGHTS

The final decision between ECs and private condos generally boils down to whether you see the property as an investment (and if yes, then for what timeframe?) or a home to live in.

If affordability is your main concern, ECs will make more sense for a first-time buyer looking for a comfortable place to call home or raise a family while being practical with their finances. But if budget is not an issue, buying a private condo may be a better choice. A private condo makes a good choice for long-term investment and can be sold without any MOP restrictions.

Although the gap is narrowing, the price gap between ECs and private condos is still evident. ECs are still an affordable option for HDB upgraders wishing for a higher standard of lifestyle.

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