Affordability of Executive Condominiums for HDB Upgraders
Ministry of National DevelopmentSpeakers
Summary
This question concerns MP Gan Thiam Poh’s inquiry regarding the affordability of Executive Condominiums (ECs) for HDB upgraders and plans to increase EC supply. Minister for National Development Desmond Lee highlighted measures to ensure affordability, including eligibility restrictions, a $16,000 income ceiling, and CPF Housing Grants of up to $30,000 for first-timer families. He explained that recent cooling measures, such as tightening the total debt servicing ratio to 55% and raising the medium-term interest rate floor, aim to encourage financial prudence and moderate price growth. Minister for National Development Desmond Lee also noted that EC supply is adjusted through Government land sales programmes based on factors like unsold stock, take-up rates, and market demand. The Government will continue to monitor market conditions closely and review housing policies to ensure the EC scheme remains a relevant housing option for Singaporeans.
Transcript
42 Mr Gan Thiam Poh asked the Minister for National Development (a) whether the Government will review the Executive Condominium (EC) scheme and ensure that the prices of ECs are within the reach of HDB upgraders in view of the widening gap between private property and HDB prices, without affecting the affordability of HDB flats for Singaporeans; and (b) whether there are plans to increase the supply of ECs to meet the demand.
Mr Desmond Lee: The Executive Condominium (EC) Housing Scheme was introduced to provide an affordable option for higher-income Singaporeans who aspire to own private housing. ECs offer similar design features and facilities as private condominiums and are treated as strata-titled private housing after 10 years.
The Government has put in place various measures to ensure that ECs are priced affordably. These include initial eligibility and ownership restrictions, such as the income ceiling of $16,000 and a minimum occupation period, to prevent speculative purchases. In addition, eligible first-timer families can receive a CPF Housing Grant of up to $30,000 for their EC purchases from developers.
Since the first quarter of 2020, both the private and public housing markets have remained buoyant. The increase in housing prices reflects broad-based demand for housing, supported by the previous low interest rate environment. The Government has implemented two rounds of measures since December 2021 to moderate the housing market and encourage home buyers to exercise financial prudence in their purchases.
In particular, the following measures apply to housing loans provided by private financial institutions for EC purchases: (a) tightening of the total debt servicing ratio (TDSR) threshold from 60% to 55%; and (b) raising the medium-term interest rate floor which is used to compute TDSR and mortgage servicing ratio (MSR) by 0.5 percentage point. We expect these measures to moderate the pace of housing price increases.
In planning for the supply of ECs, the Government takes into consideration multiple factors, such as the existing unsold stock, take-up rate of the new EC units and prevailing market sentiments. We will continue to monitor the housing market conditions closely and review our housing policies to ensure that the EC Housing Scheme remains relevant in meeting the housing needs of Singaporeans. This would include adjusting the supply of future Government land sales programmes, including EC sites, as necessary.