By Wong Siew Ying | POSTED: 13 Dec 2013 21:08 | CNA

SINGAPORE

Property agents expect larger executive condominium (EC) units to be a tough sell following the implementation of the 30 per cent Mortgage Servicing Ratio (MSR) on December 10.

Seven executive condominium projects were launched for sale in 2013. They offer a total of 3,337 units, of which 2,337 have been sold as of December 10.

Of the remaining units, agents say 48 per cent are larger 4- and 5-bedroom apartments, which could cost close to or above S$1 million.

Sales of these units could be hurt with the new MSR which is capped at 30 per cent of the borrower’s monthly income, affecting his or her ability to buy more expensive units.

Some analysts estimate that a household with a combined income of S$12,000 can probably afford an EC unit costing around S$1 million, assuming they take an 80 per cent loan over 30 years.

The EC projects with the largest balance stock of large units are Waterwoods in Punggol with a total of 147 four- and five-room apartments, SkyPark Residences at Sembawang with 135 apartments, and Sea Horizon at Paris Ris with 95 apartments.

They are the last three projects to be launched in 2013.

Property agents say the impact on sales will likely be felt in the next one to two months as the market comes to terms with the new MSR, and that developers of new EC projects will have to be creative in right-sizing the units to drive sales.

“The smaller units, like the 2-bedrooms and the 3-rooms that are probably in the region of 980 square feet to less than 1100 square feet — those are receiving quite well (response). They are still within the affordability level. So going forward, I think developers may consider to build these sizes again,” said GPS Alliance CEO Jeffrey Hong.

Meanwhile, prices of ECs are not likely to fall immediately. However, industry players see a more stable price trend in the second half of 2014 when new EC projects are expected to be launched.

“Before the implementation of MSR, there is a possibility that EC prices may move up further from $800 per square foot (psf) to $850, even $900 psf,” said OrangeTee managing director Steven Tan. “Because this is the only market that is not affected by the TDSR (Total Debt Servicing Ratio).”

“Now with this MSR, definitely the market uptrend will be controlled and there will be a stabilising effect — probably it will go back to the price level of maybe S$750-800 psf. For some good locations, it could still be above S$800 psf.”

In January 2013, the government announced a new requirement that EC developers will only be able to market their projects 15 months from the date of award of the sites.

Analysts say the new rules will encourage developers to be more cautious with their land bids and to better manage cost.

– CNA/ec

http://www.channelnewsasia.com/news/business/singapore/large-ec-units-may-be-a/921452.html