Can the EC Boom Last? Examining the Pricing Conundrum

Breaking News! The property market is buzzing (again) as new EC tender has set a record at 768.4 psf!

At this entry, the developer is likely targeting a sale price of around $1,600 to $1,700 psf. This is quite a leap from the launch of Tenet EC in end 2022, which was selling at approximately $1,400 psf on Day 1, with recent units going for over $1,500 psf. This significant leap not only signals the developer's optimistic market sentiments, but also paints a picture of the property market at least in the near future.

Souce: Edgeprop

While there are no doubts that the location is highly attractive - being just a few minutes’ walk from Tampines West MRT - it raises intriguing questions about emerging trends in the real estate market at large. It is worth noting that the current private market is in a somewhat consolidation phase, reminiscent of a coiled spring waiting to release its pent up energy. We have some exciting insights and potential developments that we believe will see the next upswing, so feel free to reach out in a PM!

Source: The Straits Times

One concern I have on this pricing bid would be the income ceiling for EC purchases, set at $16,000. Consider this: a couple with this combined income, considered ultra-high net worth in the EC market, could only secure a loan of up to $920,162. This translates to a maximum purchase price of $1,226,883.

Is this enough to secure a 3-bedroom unit? Given my projections, it is estimated that a 3-bedroom could be priced around $1.5 million. That would require more than $200,000 extra in downpayment as they are unable to get a full loan.

The question looms large: is this financial pathway achievable for most first-time buyers? Perhaps it’s more feasible for second-time buyers who have perhaps made their first significant gain from a Build-To-Order (BTO) flat and are now eyeing their next milestone. They might have the resources to navigate this challenging landscape, but what about first timers? The current structure, if unadjusted, could render ECs elusive for a large segment of the population, even those who might technically qualify as top earners.

With these limitations, the government might need to revisit the income ceiling, or ECs could become out of reach for many, even those at the top of the earning scale. This could lead to a scenario where ECs morph into an opportunity available only to a selected group, rather than the diverse community that they were originally intended to serve. 

These insights highlight the shifting sands of Singapore’s real estate market. As much as home owners welcome these news of soaring prices and record-setting tenders, it’s crucial to consider the broader implications for prospective home buyers.

I hope you found these insights helpful. I'd love to discuss real estate further with you! feel free to PM me on any real estate related matters!