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Second-time buyers get a better shot at EC units

Last Friday news that second-time buyers of public housing units would be given more chances to purchase executive condominium (EC) units; the previous 5 per cent limit increased to 30 per cent of units in ECs will now be set aside for this class of house hunters.

ECs are sold by private developers with condominium-like facilities, but come with conditions set by the Housing Board, such as a five-year minimum occupancy period.

All 182 units of Twin Waterfalls set aside by developer Frasers Centrepoint for second-timers were snapped up in two hours. (Click here to find out why Twin Waterfalls is sold so quickly!)

Its spokesman Elson Poo said the strong demand was a testament to the attractive pricing of the project, which is going for $698 per sq ft (psf).

In all, 460 of the 728 units have been sold. (Click here to find out why Twin Waterfalls is sold so quickly!)

The response for the 670 units in the other executive condominium project being marketed, the Tampines Trilliant, was more muted. (Because Twin Waterfalls is a better location! Click here for more info!)

A Sim Lian group spokesman said that of the 168 units released for second-timers on Saturday, about 110 units were sold within the day.

About 300 units, which go for $766 psf, have been sold.

Ultimately, the demand boils down to price as well as the quota.

The higher the price goes, the more skewed towards second-timers the number will be, because first-timers may not be able to afford the more expensive developments.

Going forward, you might see more ECs being dependent on second-timers or HDB upgraders rather than first-timers, given the glut of affordable Build-To-Order (BTO) flats coming onstream.

The Government has promised to build about 25,000 new flats this year.

The psf prices of ECs when they were launched in 1996 was about $400; EC units now go from about $700 to $750 psf.

Nearby private condominium units are fetching $820 to $950 psf for comparable flat types.

On the other end of the scale, a larger BTO flat will cost $250 to $350 psf, and a resale flat, $380 to $550 psf.

If second-timers continue to go for ECs, it may be feasible to revise the quota even further.

Based on the sales at Twin Waterfalls, the 30 per cent allocated to second-timers have already been taken up. Of the 70 per cent reserved for first-timers, slightly less than half have been taken up. (That is to be expected. 2nd-timers are naturally more able to afford it since they have been working longer and have another property to leverage on.)

The Government has responded to ground sentiment. But it could still be frustrating for the second-time buyer, who may have a stronger financial base but do not have the chance to buy EC units.

Such demand may continue, since second-timers feel they have a real chance at getting a choice unit now. 

As a rule, the ratio of first- and second-timers are observed only within the first month of a project’s launch. After that, any eligible house hunter may buy, although the less-desirable units may be left by then.

The revised quota is not expected to make a big impact on the market due to the small quantities, unless the Government sells more land for ECs.

Source: The Straits Times – 5 March 2012

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