By Wong Siew Ying | POSTED: 21 Mar 2014 18:57 | CNA

SINGAPORE: Some market watchers have said executive condominiums (ECs) could face more competition for buyers from private residential projects.

This is especially if the total purchase price, or price quantum, for some mass market projects moderates further, as developers downsize units to keep them affordable.

There are currently about 900 units of unsold EC units in the market.

Sales of ECs have slowed significantly in recent months.

According to caveats lodged, some 90 units were sold in the first two months of this year, compared to over 460 units during the same period in 2013.

Analysts said key reasons for the poor sales are the loan restrictions imposed at the end of last year, as well as a lack of new EC launches.

They further warned that the EC segment could come under more pressure from new launches of private homes in the suburban areas.

Christine Li, head of research and consultancy at OrangeTee, said: “There is a risk that mass market prices might soften a bit, and if developers start to launch mass market prices at below the S$1,000 per square foot mark, I think the upgraders will be swayed towards buying mass market condos rather than ECs because there aren’t any restrictions on the minimum occupation period for mass market condos.”

From its own calculations, OrangeTee found that the median purchase price in the EC market has surpassed that of private non-landed homes in the first quarter of this year, at about S$948,000 for ECs compared to S$900,000 for private condominiums.

However, it said the data could also reflect the lower number of EC transactions and the larger sizes of EC units sold.

Apart from sales restrictions, EC buyers must also meet a S$12,000 monthly household income cap.

And analysts said that because of the loan curbs, those who make S$6,000 to S$8,000 a month who could previously afford an EC unit may have been priced out of the market.

The government currently provides a housing grant to help an eligible first-timer family to buy an EC from the developer. For example, EC buyers who are Singapore citizens with an average gross monthly household income of up to S$10,000 can receive a grant of S$30,000.

The mortgage servicing ratio of 30 per cent has affected buyers’ ability to afford larger and more expensive EC units. Therefore, some analysts expect upcoming EC units to be no larger than 1,200 square feet.

Eugene Lim, key executive officer of ERA, said: “That would probably rule out putting in luxurious big units in the projects because it may not make sense.

“If you want to move more units, then you have to size them down to keep the quantum to be affordable. You probably won’t see big balconies (or)… private lift lobbies.”

Currently, some units in the market are as large as 1,722 square feet, which is the maximum size allowed for EC developments.

There are five new EC projects in the pipeline, which are likely to be launched in the second half of the year.

These sites are located at Woodlands Avenue 5, Anchorvale Crescent, Punggol Central, Punggol Drive and Yuan Ching Road.

– CNA/ms