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  • Writer's picturePriscilla Low

How Much Do You Need To Earn To Buy A Home In Singapore [Updated EC 2024 Edition]

Updated: Apr 20


How Much Do You Need To Earn To Buy A Home In Singapore (Updated EC 2024 Edition)


This is a common question that I hear from young couples who are looking for their first home, but not everyone is lucky when it comes to balloting for BTOs. Some have failed repeatedly and they may not keen to buy an aging HDB resale home and bear the burn of the depreciating value.


For those who are financially strong, you can consider buying a executive condominium (EC) or private condominiums. Actually, a personalised consultation would be most ideal for you, but we often hear that buyers could be a little shy to meet agents or fearful of possible hard-sell tactics.


So I have decided to write this article - to throw some light to some of your exploratory home-buying questions about ECs. If you want to know more about private condominiums, I will be discussing that in a separate blog post soon. Else this article is going to be a loooooong read.


And just a gentle heads-up: this blog article shouldn't replace the discussion that you should have with your real estate agent (which can be me, haha), and do note that it only aims to give you some inkling about how much you need to earn to buy a EC in Singapore.



What Are Executive Condominiums (ECs)?


Illustration that summarises that ECs are the best of both worlds - Subsidised pricing like HDBs and Full facilities like Condos
Illustration About ECs Having Best Of Both Worlds - Subsidised Pricing Like HDBs And Full Facilities Like Condos

Executive Condominiums (ECs) are a type of housing in Singapore introduced by the Government in 1995. They are homes built by private developers and come with similar facilities as private condominiums.


Almost like a hybrid of public and private housing, ECs are designed to provide affordable housing options for Singaporeans, particularly the young professionals and families who can afford more than a HDB but find private condominiums out of their budget.

Why Are EC Prices Lower Than Market Rate?


ECs are priced lower than private condominiums because their land sale prices are subsidised by the Government.


Unlike private condominiums, ECs come with a minimum occupation period of five years. During this period, EC owners cannot sell or rent out the entire unit.

  • After five years: ECs can be sold in the open resale market to any Singaporeans and Singapore PRs.

  • After 10 years: ECs are fully privatised and can be sold to anyone, including foreigners.

For the past decade, ECs are typically located in non-mature estates such as Punggol, Sengkang, Tampines North, Sembawang, Choa Chu Kang etc.


Have ECs Seen Good Gains ?

Yes and why is that so? ECs see higher paper gains than private condominiums because of their lower price entry with the subsidised land cost.


According to a Straits Time article, owners who sell their EC within one year of the MOP period gets average gains of about $320,000. If the project reaches the 10-year mark, owners may see more than $500,000 gain in their home value.


In another Business Times article on 24 Oct 2024, EC sellers remain among the top profit gainers in Q3, unlocking over 90% appreciation gains.


Overall, we can see that ECs are an attractive option for buyers who wish to see potential appreciation in their property purchase.

Straits Times Article about EC owners getting average gains of $320,000 when selling
Business Times Article about EC sellers remaining among top profit gainers in Q3 of 2023


So What Are The Prices Of ECs Now?


As at April 2024, there are three ECs available for sale - North Gaia, Altura and Lumina Grand.


North Gaia

Location map of North Gaia, the only EC in the North
Location Map Of North Gaia, The Only EC In The North

Located at D27 Yishun, North Gaia spans over 230,000 sqft, which is the almost three soccer fields, and will house 616 units of 3-bedroom to 5-bedroom units. To date (end Oct 2023), the development is about 60% sold.


If you love a tranquil resting environment that is close to nature, North Gaia will appeal to you with views of the Bongsu Canal, park connectors, coastal views and lush forestry. It also boasts full condominium facilities including tennis court, swimming pools, clubhouse, co-working space, family party room, mini flying fox, mini rock climbing wall and many more.


As at Mar 2024, the popular room types are 5-bedroom units (100% sold) and 3-bedroom with yard units (78% sold). Based on the recent transacted price, it ranges from $1.183m for a 969 sqft 3BR unit to $2.214m for the larger 5BR units (last unit sold!).

Jan and Feb 2024 transactions for North Gaia
Jan and Feb 2024 Transactions For North Gaia EC


Altura

Location map for Altura EC
Location Map For Altura EC

Located at D23 in the heart of Bukit Batok, this full condominium development spans over 134,000 sqft, which is about one and half soccer fields, and will house 360 units of 3-bedroom + study to 5-bedroom + flexi units. To date (end Oct 2023), the development is almost 90% sold.


If you love being the first to experience a transformational change, you will be drawn to Altura where it is strategically nestled between the heartlands of Bukit Batok, the Jurong urban region and the upcoming Tengah township.


Tengah is slated to be Singapore's first car-free town so its connectivity is expected to be further enhanced while Jurong will be transformed into the second CBD and a tourism destination.


As at March 2024, the popular room types are 3BR + study (99.5% sold) and 4-bedroom + flex units (96% sold). Based on the recent transacted prices, it ranges from $1.389m for the smaller 3BR unit to $2.21m for the larger 5BR units.

Jan and Feb 2024 transactions for Altura
Jan and Feb 2024 Transactions For Altura EC

Lumina Grand

Location map for Lumina Grand
Location Map For Lumina Grand

Located at the fringe of D23 Bukit Batok and just next door to the exciting Tengah new township, this full condominium development spans close to 180,000 sqft, which is about two and one quarter soccer fields, and will house 512 units of 3-bedroom to 5-bedroom. On 27 Jan 2024 launch date, the development sold 53% with many second timers waiting to ballot from the remaining units on 2 Mar 2024.


Just diagonally to Lumina Grand are two upcoming and coming malls, followed by a stretch of retail shops enroute to the new Tengah Plantation MRT. While the walk would be less than 10mins to this MRT station, we anticipate that many may take longer with the convenience of many retail shops with their everyday offering e.g. supermarkets, bakeries, eateries etc.


Lumina Grand is also a short walk to Tengah MRT and this walk is also going to be new refreshing experience in this new car-free town. Plus, being close to Jurong is a plus point with its exciting lakeside activities developments and upcoming tourism development.


As at March 2024, the popular room types are 4-bedroom (85% sold) and 3-bedroom premium units (87% sold). Based on the price list on the launch day, prices start from $1.357m for the smaller 3BR unit to $2.115m for the larger 5BR units.



For Those Who Want An EC For Primary School Admission:


You will be happy to know that both developments have a good options of primary schools within 1KM. For example, Anglo-Chinese School (Primary) from 2030 will be within 1KM of Altura and Lumina Grand while Chongfu Primary School is within 1KM of North Gaia.


For primary school admission, you can use the address of a yet-to-be-completed property that you have purchased, but do note that the vacant possession of the property must be within two years of your child's entry into Primary 1.


Let's see two examples to illustrate the timeline planning needed for your child based on North Gaia's estimated possession date in 2027:

Illustration about timeline for Primary 1 registration
Illustration About Timeline For Primary 1 Registration

Now, that we have an idea about ECs and its prices. Let's look at the math.


How Much Can You Loan From The Bank For An EC?


To simplify the math, let's assume that the buyers are Singapore citizens taking bank loan. For ECs, buyers are subject to the 30% Mortgage Debt Servicing (MSR) ratio.

What Is Mortgage Debt Servicing (MSR)?


MSR is a financial guideline that limits the amount of salary that buyers can use to repay loans. The main purpose of MSR is to ensure that buyers do not overextend themselves financially when buying EC.

How Much Do You Need To Earn To Buy A Home In Singapore [HDB 2023 Edition] - "Explore the financial considerations of buying a HDB BTO or HDB resale in Singapore. Understand key factors such as loan quantum, Mortgage Servicing Ratio, and learn how these can influence your home buying journey.
Illustrated Example of 30% Mortgage Servicing Ratio

A 30% MSR means that your maximum loan instalment for each month cannot exceed 30% of your household income. For example, if your combined monthly income is $10,000, the maximum monthly instalment allowed for loan is $3,000.


If the buyers have existing debt obligations e.g. car loan, school loan etc, this will form part of the 30% MSR and reduce the loan quantum for your property loan.



What Is Our Loan Quantum For A 30-Year Loan Tenure?


All of us can take a loan up to 65 years of age, and the standard loan tenure for EC is up to 30 years for ECs, which is 5 years longer than the maximum loan tenure for HDB BTOs and HDB resale units. You can explore with the bank to take a longer tenure but this will come with more conditions. If you wish to know more about this, PM me.

Buyers below 35 years old can safely take the full 30-year loan tenure. Buyers who are older than 35 will be faced with a shorter loan tenure and their loan quantum would be reduced accordingly.


Based on a 30-year loan tenure, these are the estimated loan quantum for ECs for the various income tiers:

Estimated Loan Quantum For 30-Year Bank Loan For ECs
Table 1: Estimated Loan Quantum For 30-Year Bank Loan For ECs

How to read this chart: For example, a household income of $7,000 is likely to be able to secure a bank loan of about $405,000 to buy an EC.



So How Much Do We Need To Earn To Buy A EC In Singapore?


Now that we know the possible loan quantum, let's go into the payment milestones of buying a EC across the various price range.


Artist Impression Of North Gaia EC
Artist Impression Of North Gaia EC


Math for North Gaia 3BR EC At About $1.18M

Payment Milestones

Type of Payment

Amount

5% Option Fee To Book Flat

Cash

$59K

Remaining 20% Downpayment*

CPF/Cash

$236K

Stamp Duty

CPF

$31.8K

75% Loan

Loan

$885K

TOTAL

$1,211,800

*You could be able to pay only 15% first if the EC is in its early stage of construction. The other 5% could be paid 6 - 12 months later when the foundation works are completed.


Based on a price of $1.18M, do make sure that:

  • you have cash of $59K

  • your CPF accounts have $267.8K

  • your IPA allows for $855K

So for a 3BR EC in North Gaia that may cost about $1.18M, you will need to have a combined income of $15,000+ [use table 1 to check need loan quantum vs household income]. This is assuming that you have just enough cash and CPF for the purchase of the EC.




Artist Impression Of Altura EC
Artist Impression Of Altura EC

Math for Altura/Lumina Grand 3BR EC At About $1.45M

Payment Milestones

Type of Payment

Amount

5% Option Fee To Book Flat

Cash

$72.5K

Remaining 20% Downpayment*

CPF/Cash

$290K

Stamp Duty

CPF

$42.6K

75% Loan

Loan

$1,087,500

TOTAL

$1,492,600

*You could be able to pay only 15% first if the EC is in its early stage of construction. The other 5% could be paid 6 - 12 months later when the foundation works are completed.


Based on a price of $1.45M, do make sure that:

  • you have cash of $72.5K

  • your CPF accounts have $332.6K

  • your IPA allows for $1,087,500

If we look at the math for Altura, the buyers will need a loan of $1,087,500. For purchase of ECs, it is eligible for households with a cap income of $16,000 which means that the estimated maximum loan quantum could be $930K. This means that the loan quantum is not able to cover the required loan. In this case, the buyers would need to top up the difference of $157,500 using their CPF and/or cash. This is assuming that you have just enough cash and CPF for the purchase of the EC.



You May Wonder, How Do Buyers Afford ECs?


Some of you may be gasping right now because this means those earning at the cap of $16,000 household income may not be able to buy a 3BR unit at Altura. If so, who are the buyers of these ECs?


You will be surprised that some of our young Singaporeans are very savvy with their funds - putting a good part of their salary into their savings and/or putting their money into some stable investment options e.g. fixed deposits, bonds and more.


Of course, some parents could also lent a helping hand to make up the difference if it is a small sum. But many are like me, who aren't savvy to their property/financial planning, it is good that we start to know more and start planning towards our property purchase.


And it isn't all loom and gloom for new buyers. You can also keep a lookout for EC launches that have smaller unit type e.g. 2BRs as they have lower price quantum. And there is always the option of buying private condominiums. Many buyers are surprised to find out that private condominiums may be more budget-friendly at this stage of their lives because of the Total Debt Servicing Ratio (to be shared more in the next upcoming post).


Also, ECs are good options for HDB upgraders where they could have gained some appreciation from the sale of their HDB units. As reported in The Business Times on 13 Oct 2023, the recent strong prices in the HDB resale market has helped HDB upgraders to unblock their next funds to buy an EC.

A Business Times Article About Windfall Profits In Resale Market Make EC An Alluring Buy For HDB Upgraders
A Business Times Article About Windfall Profits In Resale Market Make EC An Alluring Buy For HDB Upgraders

Without the weight of ABSD, EC is a very attractive option for HDB Upgraders. And for HDB upgraders who wish to unlock this windfall profit and still wish to stay at their HDB while waiting for their EC to be ready, contact me at 8847 0541 to explore if you can smoothly transit from your HDB to a EC.



How Do You Calculate Your Own Home Budget?


But you do encounter a situation where your IPA may not be sufficient for the 75% property loan but you do have strong cash/CPF funds, we strongly encourage you to have a one-to-one chat with your real estate agent (or have a zoom with me) to work through your math. Nonetheless, you can use this rule of thumb as a guide:

A Simplified Formula To Calculate Your Home Budget
A Simplified Formula To Calculate Your Home Budget

This means that your cash savings + your CPF OA funds + loan quantum must be able to cover the property's selling price and its stamp duty.


The amount of stamp duty varies according to the selling price. You can use the IRAS tax calculator to calculate the stamp duty.


And by now, you should have a rough idea of how much you would need to earn to buy an EC.



What About The Upcoming EC Launches?


While ECs are very hot options for home buyers because of its attractive price entry compared to the private condominiums, some buyers may not be keen with the locations of the current launches - which are either in the north or west.


What other options are going to come up? Some are also hoping to see property prices dropping in the years ahead given the seemingly slow market, the excess units in the market and the high interest rate environment.


Let's take a look at the recent prices that developers have paid for the EC land and see if EC prices may drop in the future.


EC Land Sale Prices (PSF) From Mar 2022 To Feb 2024
EC Land Sale Prices (PSF) From Mar 2022 To Feb 2024

If you look at the various land costs above, you will see the following trends:

  • Lower land sale cost usually translates to lower breakeven price and thus allowing for lower sale prices. This is because land cost takes up the bulk of the selling price. This explains why a similar sized 3BR in North Gaia is sold lower than a 3BR at Altura.

  • There are going to be three upcoming launches in Tengah (X2) and Tampines. Hooray for those eyeing an EC in the east!

  • The recent three land sales at Plantation Close (X2) and Tampines Street 62 have crossed the $700 PSF mark. This means that their sale prices would be higher than the current inventory of ECs. As such, it is unlikely to see prices of EC dropping in the future.

  • Based on the current land sale trends, it seems that the Tampines EC is likely to set a new record launch price in the future.



What Other Options If We Are Keen To See Capital Appreciation In Our Property?


Buyers who are unsuccessful at their HDB BTO, not keen on HDB resale and/or not budget ready for ECs, what else is there for you if you wish to see good paper gains in your property? Look out for the next blog post where we discuss - How Much Do You Need To Earn To Buy A Private Condo In Singapore? You could be surprised that you have more options in the private condominium market.


And if you need a chat to make a better idea of your best property options, I am just a zoom away.


 

ABOUT THE AUTHOR

PrisLowxProperty - Clients' Interest Over Mine. Always.

Pris Low has close to 20 years experience in the non-profit sector - representing consumers in their conflicts with retailers and advocating for the less privileged in our community.


Her social service background has helped her to be sensitive and attentive to her clients' needs and feelings so that she can prepare them, both financially and emotionally, to welcome their new homes.


She has thrived because she doesn't tell her clients what to do. She hears their needs and explains the options to them. She respects every choice made by her clients because she feels that there is no wrong decision as long as it meets their needs and they are aware of the possible pitfalls and prepare for it.

Her Clients' Interests Over Hers. Always.


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