Low Price HDB ECs are becoming more popular in Singapore, and there are now over 15,000 new units being released this year. They are the equivalent of private properties at a lower price. Here are the pros and cons of owning one: Owner-occupiers do not mind waiting for the five-year Minimum Occupancy Period (MOP) to complete and the ten-year wait for privatisation. They will likely upgrade or move within the time period. The low price of ECs has a huge advantage over private properties, and they are comparable in value to private properties.
15,000 new ECs to be released in 2019
HDB is set to release 15,000 new low-price HDB ECs in 2019. These properties are expected to be very affordable, with prices starting from S$230,000. They will be available in selected neighbourhoods in Singapore. These properties will also include similar amenities as private condominiums, such as a swimming pool and gym. The income threshold for EC purchases is S$16,000, which means that a Mr and Mrs Ong would be able to afford an EC.
HDB is offering grants to eligible first-time buyers of low-price HDB ECs. There are two types of grants, the Family Grant and Half-Housing Grant. The amount of each grant will vary, but they will cover the costs of the first-time purchase for a Singapore household.
Income ceilings for HDB flats
Income ceilings for HDB flats are a key aspect in determining whether you’ll qualify for a flat. HDB calculates these by looking at your household’s average monthly income, which includes a person’s take-home pay, as well as the incomes of other family members. If you’re just starting out, you can defer the income assessment until you’re closer to taking the keys.
If you’re a single parent, you will have to wait about five years for HDB approval. For married couples, this waiting period is around four years. Singles who meet the income ceiling can opt for the Joint Singles Scheme instead.
Downpayments for ECs
Downpayments for HDB ECs are typically 25% of the value of the property, which means that you must be prepared to pay that much in cash. If you are purchasing a $1 million EC, for example, you must prepare to put down $50,000 in cash. In addition, the downpayment must be sufficient to cover mortgage servicing ratio requirements.
HDB downpayments are higher for expensive flats. For a three-room EC in a suburban district, the average downpayment is $250,000, which consists of $250,000 in cash and $25,000 for stamp duty. If you are a permanent resident, you must also plan for additional Buyer’s Stamp Duty (ABSD) of 5% of the property cost.
EC resale grants
HDB EC resale grant scheme is attracting attention of property seekers due to its attractive benefits. First of all, it offers lower mortgage payment. This means that if you want to upgrade your lifestyle, you can do so. Secondly, this scheme helps first-time buyers to purchase HDB EC flats at lower prices. There are three types of HDB EC resale grants: CPF housing grant, enhanced housing grant, and proximity housing grant.
The grant amount depends on the family’s income. A single person earning below S$26,000 will qualify for a lower grant amount. A two to four-room flat will earn $25,000, whereas a five-room flat will receive $20,000, and so on. The EHG grant is available to all working households, and it is based on your average gross monthly household income over a 12-month period.
ECs are more affordable than private condos
HDB ECs are government-sponsored homes that are affordable for first-time buyers and young couples. The government is making ECs more affordable by providing financial assistance. However, buyers must note that ECs are only available in certain areas. This means that it is not always possible to live in prime locations. ECs are located near public transport stops, such as MRT stations.
Private condos, on the other hand, are suitable for investors and those looking to hold the property for a long time. The price difference between HDB ECs and private condos after EC privatisation will be minimal. In fact, it is very unlikely that the price difference will be more than five percent. Furthermore, private condos are more likely to sell fast under the right market conditions.
ECs are designed, constructed and sold by private developers
ECs are private development projects that are designed, constructed and sold by private developers. They have similar facilities to private developments, but with a lower price tag. They are also more profitable as they have lower initial purchase costs. ECs can be resold to PRs after five years after completion and to foreigners after 10 years after TOP. Prices of ECs have fallen from their peaks and are currently hovering around S$750 per square foot. This is primarily because of the 30 per cent MSR that has reduced the demand pool for ECs and developers have moved to keep the prices as low as possible.
ECs are cheaper than condos and still offer similar finishings. They also qualify for the CPF Housing Grants and are eligible for foreign purchases once they reach the eleventh year of ownership.