Chairman, the price of ECs in Singapore has skyrocketed in the past 10 years. ECs started out as a more affordable option for young couples who desire to purchase a private condominium but do not have the means to do so. Understandably, the price per square foot for an EC will be higher than a resale HDB flat. But I would argue that the prices today have become too expensive to service their original intention.
As ECs were slated as a more premium yet affordable public-private hybrid for prospective buyers, its premium can be compared to the resale market for HDB flats.
In 2016, the average per square foot price for a resale HDB flat stands at approximately $424, and approximately $782 for an EC in 2016. This is roughly an 84% difference in price. In 2021, the median price per square foot for a resale HDB flat is approximately $488, and $1,176 for an EC, which is a 141% difference in price. Coming to 2024, a resale HDB flat is approximately $603 per square foot and $1,531 for an EC, which totals out to a 154% difference. These numbers would differ based on the type of neighbourhood that the HDBs and ECs are located, but for the sake of comparison, they do serve as a useful broad basis for comparison.
The difference is even more stark in absolute terms. If we look at the average price of a new EC in 2016, this stands at around $860k vs. $439k for a resale HDB flat, a difference of around $421k. Fast forward to 2025, the average price of a new EC is at $1.7 million compared to $652k for a resale HDB flat, a difference of more than a million dollars!
When the Executive Condominium Housing Scheme was introduced in 1996, then-Minister for National Development Mr Lim Hng Kiang stated that, and I quote, “The sharp increases in private property prices in the last few years have again created a ‘sandwich class’ of young people who are beyond HDB's income ceiling, but who cannot afford private property.”
Firstly, I do not know of many young people who can afford an EC, especially when the average price stands at a whopping $1.7 million dollars and the statistics show for it. From 2021 to 2025, only 4 in 10 EC purchasers were first-timers. Even so, I reckon that one has to have access to the deep pockets of one’s parents, without which a first-timer would find it very challenging to fork out the downpayment required to afford the EC in the first place.
Moreover, the irony is that based on current financing rules, young people who are currently unable to afford an EC are deemed to be able to afford and purchase an even higher priced private condominium, given that ECs are subject to the 30% Mortgage Servicing Ratio (MSR), while private condominiums are only subject to the 55% Total Debt Servicing Ratio (TDSR).
At the prevailing household income ceiling of $16,000 per month, prospective EC buyers would be able to secure a loan of close to $1 million based on an MSR of 30%, a medium-term interest rate floor at 4% p.a., and a 30-year loan tenure. This would mean shortfall of just over $700k based on the price of an average EC today. However, the same household will be able to secure a loan of close to $1.28 million, leaving a smaller shortfall of just over $400k, should they choose to purchase a private condominium instead.
Two simple solutions are to raise the MSR, which would enable households to take on a higher mortgage to finance the property, and to increase the monthly household income ceiling, to allow more buyers into the market. However, it does not address the fundamental issue of affordability, since the price of the EC itself will not be impacted. Perversely, these may even result in an even higher increase in EC prices instead, given the wider pool of buyers now available.
Chairman, given the increasing unaffordability of Executive Condominium or ECs in the market today, I urge the MND to seriously rethink the current EC model, and to consider upstream policies to bring the price of ECs into a range that would suit their original intentions, with affordability and equitably access being key tenets to underpin the EC model.
