High Return Rate Among Executive Condominium Buyers - No Cause for Concern

Early last month, The Straits Times ran an article on high return rate among Executive Condominium (EC) buyers. Reasons given range from inability to secure loan, lower mortgage servicing ratio (MSR), cancelled marriage plans and so on.

Based on my experience, returning units due to financing issues and not meeting Minimum Occupation Period (MOP) is highly unlikely.

When I registered my application or e-Apps for Lush Acres on 14 July 2013, I have to submit my income statement. If you exceed the maximum income ceiling of $12,000 a month, you cannot register your application.

If I am an existing home owner, the agent will ask me to login to MyHDBPage and check whether I have fulfilled the five years MOP.

As for loans, there are bank staff around to assist. Furthermore there is usually a one month period after e-Apps before you are invited to select an unit (I was invited to select an unit on 17 August 2013 but I opt not to). This period is long enough for you to determine your maximum loan for the unit.

The more likely reasons could be cancelled marriage plans (but I have heard of people not cancelling the agreement and find another spouse over the next three years), loss of income and perhaps jitters over the current property market conditions.

So buyers could have chose to give up the purchase because they think prices will ease further down the road.

My advice is don't give up the purchase. EC prices are unlikely to ease. Simply because of the 15 months rule imposed by the Government. This has unwittingly created a period where there are no launches of EC projects resulting in pent up demand. But down the road, the property market is expected to stabilise.

That being said, I feel that the application rate for new EC projects are likely to hover around 2 as there is a steady supply of Build-to-Order flats and softness in the HDB resale market.


Next I will explore how much higher can a developer price their EC projects.

How Will the HDB Categorise DBSS Flats in the Resale Market?

The Design, Build and Sell Scheme (DBSS) was a concept introduced by the Housing and Development Board (HDB) in 2005. According to the HDB, the DBSS was introduced to the public housing market to offer greater choice and wider variety to meet the housing aspirations of higher income flat buyers for better design and finishes. Flats sold under the DBSS come with a 99-year lease and will be offered to buyers under similar HDB eligibility conditions like flats developed by the HDB. 

My stand from the day the HDB launched the concept of DBSS is that it is not worth buying simply because they are still HDB flats at the end of the day and they are priced much higher than any HDB flat in the same area.

The counter argument is that it is designed by a developer that builds private housing and it comes with supposedly "premium" finishes and design. Some DBSS projects even come with planter boxes, a concept found in condominiums. But please bear in mind that every unit in the DBSS project has the same design and finishes which is no different from a HDB premium flat unless the buyer re-designs the interior of the DBSS flat.

Will the HDB categorise a resale DBSS flat differently from a "normal" resale HDB flat then?

My answer is no. On a valuation basis and all things being equal, a 4-room resale DBSS flat will be valued on a similar basis as a 4-room resale HDB flat perhaps adjusting a bit for minor differences like the planter box or finishes or age or location. The HDB is not likely to create a separate category in their resale flat transactions search (http://services2.hdb.gov.sg/webapp/BB33RTIS/BB33PReslTrans.jsp) to identify a DBSS flat from a resale HDB flat. A DBSS flat is still a public flat afterall. 

But if the HDB does creates a separate category, it may go down the path for HUDC flats, with a possibility of privatising in the future. That will be an icing on the cake for such "premium" HDB flats should it happens. Buyers can pop the champagne when it happens (many years down the road).

The Premiere @ Tampines will be the litmus test being the first DBSS project to reach the minimum occupation period (MOP) end 2013.

Project Name	Location	Estimated Price Range at Launch	Estimated TOP Date	Estimated MOP Date
Pasir Ris One	Pasir Ris Central / Pasir Ris Drive 1	$389,000 to $760,000 ($556 to $672 psf)	May 2015	May 2020
Trivelis	Clementi Avenue 4	$375,000 to $770,000 ($580 to $728 psf)	March 2015	March 2020
Parkland Residences	Upper Serangoon Road	$359,000 to $738,000 ($498 to $612 psf)	February 2015	February 2020
Lake Vista @ Yuan Ching	Yuan Ching Road	$360,500 to $680,400 ($500 to $585 psf)	January 2015	January 2020
Belvia	Bedok Reservoir Crescent	$395,000 to $670,000 ($549 to $593 psf)	November 2014	November 2019
Centrale 8 @ Tampines	Tampines Avenue 5 / Tampines Central 8	$389,000 to $778,000 ($592 to $667 psf)	October 2014	October 2019
Adora Green	Yishun Avenue 11 / Yishun Central	$310,000 to $650,000 ($430 to $541 psf)	August 2014	August 2019
The Peak @ Toa Payoh	Lorong 1A Toa Payoh	$355,000 to $722,000 ($471 to $573 psf)	August 2012	August 2017
Parc Lumiere @ Simei	Simei Road	$378,000 to $575,000 ($374 to $482 psf)	May 2012	May 2017
Natura Loft @ Bishan	Bishan Street 24	$490,000 to $739,000 ($479 to $572 psf)	September 2011	September 2016
Park Central @ AMK	Ang Mo Kio Street 52	$433,000 to $689,000 ($447 to $534 psf)	August 2011	August 2016
City View @ Boon Keng	Boon Keng Road	$349,000 to $727,000 ($477 to $568 psf)	January 2011	January 2016
The Premiere @ Tampines	Tampines Avenue 6	$138,000 to $450,000 ($256 to $367 psf)	December 2008	December 2013

Source: Real Property Advisory Singapore