Choosing between HDB resale flats and Executive Condominiums
By Jermaine Koh
If you’ve only got a minute:
- HDB resale flats are generally more affordable, with average prices around S$600,000, compared to Executive Condominiums (ECs) which average S$1.04 million.
- HDB resale flats have no income ceiling, making them accessible to a wider audience, while ECs have an income ceiling of S$16,000.
- Buyers of HDB resale flats can use either HDB loans or bank loans, whereas EC buyers can only use bank loans, requiring a higher cash outlay (5% downpayment).
- HDB flats are available in all regions, including central areas, while ECs are typically located further from the city centre.
For Singaporeans who are earning above the income ceiling for buying Built-to-Order (BTO) flats, some may end up having to choose between getting a HDB resale flat and an Executive Condominium (EC) if they do not want to buy a private home. It can be a difficult choice, as each option presents unique advantages and challenges, influenced by factors such as financial situations, affordability, lifestyle preferences and long-term goals.
Understanding the nuances between these 2 housing types is essential for making an informed choice.
This article will delve into key considerations, comparing HDB resale flats and ECs across various themes including price, eligibility, location, financing options, renovation costs and lease terms.
Overview of HDB resale flats and ECs
Price analysis
HDB resale flats have traditionally been a more affordable housing option in Singapore. However, they are no longer the cheapest option available, especially for larger units or those located in areas that are easily accessible.
The average price of a 5-room resale flat in Sengkang is around S$580,000, while prices in prime locations can be significantly higher1.
The trend of million-dollar HDB resale transactions has become increasingly common. The highest transacted price for a resale flat in Oct 2024 was S$1.54 million for a 5-room flat at Cantonment Rd, with a remaining lease of 85 years 4 months.
Further away from the city centre, the highest price for an executive flat in Woodlands was S$1.155 million2.
The quarter ended 30 September 2024 set a record with 328 resale flats surpassing the million-dollar mark, bringing the total for the first 3 quarters of the year to 747. This figure exceeds the total of 469 million-dollar units sold in 2023.
| Feature | HDB Resale Flats3 | Executive Condominiums4 |
|---|---|---|
| Average price | S$600,000 | S$1.04 million |
| Price per square foot (psf) | S$580 | S$1,500 |
| Eligibility | No income ceiling | Income ceiling S$16,000 |
| Financing | HDB or bank loan | Bank loans only |
| Location | All regions (including central areas) | Typically located in the Outside Core Region (OCR) |
Source: HDB and Straits Times
ECs, on the other hand, are a hybrid between public and private housing and can be resold as private property prices after a 10-year minimum occupancy period (MOP). They remain popular especially among buyers who prefer “the comforts of condominium” over public flats but with more affordability.
ECs are typically 25% to 30% cheaper than similar private condominiums (often exceeding S$2,000psf5) in the same neighbourhood, as highlighted by industry sources6.
Yet, a recent survey7, involving approximately 1250 participants revealed that 55% of HDB flat owners find new EC prices unaffordable.
The rising costs of ECs have become a significant concern, with many buyers feeling priced out of the market. The median price for new ECs has increased dramatically from about S$798psf in 2017 to over S$1,500psf in 2024.
ECs provide a strong value proposition, particularly for middle-class individuals or those looking to upgrade to private properties that may be financially out of reach.
Comparison between HDB resale flats and ECs
When comparing HDB resale flats and ECs, several factors come into consideration:
| HDB resale flats | Executive condominiums | |
|---|---|---|
| Initial costs | Downpayment can be fully paid by CPF and/or cash | At least 5% downpayment to be paid in cash |
| Renovation costs | Depending on the condition of the unit purchased | Generally newer, with modern finishes but may still require some customisation |
| Monthly loan repayments | Potentially lower due to more favourable financing options | Higher due to larger loan amounts and bank interest rates |
| Housing grants and subsidies | Up to S$190,000 | Up to S$30,000 |
| Maintenance fees | Service and conservancy charges typically range from S$22 to S120 | Starts from S$250 per month |
| Long-term value | Depends on location and lease | Higher potential for appreciation post-privatisation (10 years MOP) due to broader market access |
Eligibility criteria
There is no income ceiling for HDB resale flats, making them accessible to a broader audience. To quickly determine your eligibility for an HDB flat, apply for the HDB Housing Financial Eligibility (HFE) letter.
After applying, you'll receive details about your eligibility for an HDB flat, any CPF housing grants, the loan amount you qualify for, and, for second-time buyers, the resale levy amount.
Although there are no income restrictions, other eligibility criteria such as citizenship status and ownership history must be met. You’ll also need to follow HDB's ethnic quotas to ensure fair housing access.
Conversely, ECs come with an income ceiling of S$16,000.
To purchase an EC, you must meet specific eligibility criteria, including citizenship status and family nucleus requirements (married couples, singles aged 35 and above).
Once an EC has its Temporary Occupation Permit (TOP) for over 10 years, it enters the open market. This means that there are no restrictions on who can buy it (foreigners and corporations). Before this period, only Singapore Citizens (SCs) and Permanent Residents (PRs) can buy an EC after the 5 -year MOP or if the TOP is issued within 10 years.
Financing options
Buyers of ECs can only use bank loans for financing, while those purchasing HDB resale flats have the option to use either HDB loans or bank loans.
With either an HDB loan or a bank loan, you can borrow up to 75% of the property's price. For a bank loan, you must pay 25% of the price initially, including at least 5% in cash.
In other words, buying an EC requires a higher cash outlay, in addition to stamp duties, lawyer’s fees and other miscellaneous costs. Potential buyers will need to be aware of the financial outlay at the start as compared to buying a resale HDB flat.
When considering financing options, DBS Easy Switch Loan presents an affordable choice as it allows one free switch to a predetermined 3M Sora (Singapore Overnight Rate Average) package, potentially reducing monthly payments during the loan tenure.
Find out more: DBS Easy Switch Loan
Additionally, visit DBS Home Marketplace and utilise the online tools and resources like DBS MyHome planning tool to work out your home financing budget.
Grants and subsidies
First-time couples purchasing a resale HDB flat can receive housing grants of up to S$190,0008. This includes the
- CPF Housing Grant for Resale Flats (Families) of up to S$80,000
- Enhanced CPF Housing Grant of up to S$80,000, and the
- Proximity Housing Grant of up to S$30,000
For ECs, you can only qualify for a housing subsidy of up to S$30,000 when purchasing a unit from a developer9.
Location
ECs are typically located in the Outside Core Region (OCR), which may not always offer the same level of accessibility and amenities found in mature estates where many HDB flats are situated.
This can lead to longer commutes and reduced convenience.
Lifestyle and amenities
Both housing options serve different lifestyle needs. ECs often feature amenities such as:
- Swimming pools
- Gyms
- BBQ pits
- Tennis courts
- Gated security
These facilities are comparable to those found in private condominiums. On the contrary, resale flats may lack high-end features but provide essential community facilities like playgrounds and community centres. They cater more towards functional living rather than luxury amenities that are exclusive.
Other financial considerations
Renovation costs for HDB resale flats or ECs can vary significantly based on the age and condition of the property. Older flats may require extensive renovations, including structural changes such as tearing down walls, plumbing works and updating of electrical systems, which can lead to higher expenses.
For HDB resale flats, the monthly maintenance fees (service and conservancy charges) are relatively low, averaging around S$100 to S$120 for larger units10.
As ECs offer different facilities, the maintenance fees will vary depending on the number and type of amenities in the development. Be prepared to fork out at least S$200 monthly.
Lease terms
For HDB flats, at least a 20-year lease is required to use CPF funds for purchase11. As the remaining lease decreases, the value of the flat can drop, making it less attractive to potential buyers, especially if you plan to sell or rent in the future.
In contrast, new ECs have a 99-year lease and can be privatised after 10 years, enhancing their marketability.
Choosing between an HDB flat and an EC depends on your intentions. If you're looking for an investment with potential appreciation, ECs are often more appealing. However, if your priority is finding a long-term home, consider factors like location and community amenities alongside resale value.
Conclusion
Ultimately, the choice between HDB resale flats and ECs hinges on individual financial capabilities and lifestyle preferences. While resale flats may offer lower initial costs and ongoing expenses, ECs present opportunities for greater long-term value and appreciation potential.
You should assess your financial situation and long-term goals when making this decision.
Start Planning Now
Check out DBS Home Marketplace to work out the sums and find a home that meets your budget and preferences. The best part – it cuts out the guesswork.
Alternatively, prepare yourself with an In-Principle Approval (IPA), so you have certainty on how much you could borrow for your home, allowing you to know your budget accurately.
Sources:
1 The Business Times, “Government probes ‘misleading’ and ‘unrealistic’ resale listings for S$2 million HDB flats”. Retrieved on 1 Nov 2024.
2 SRX, “Singapore Property Prices Trend”. Retrieved on 1 Nov 2024.
3 HDB, “Resale Statistics”. Retrieved 1 Nov 2024.
4 6 CAN, “‘A Singaporean advantage’: The appeal of the executive condominium”. Retrieved 2 Nov 2024.
5 7Propnex, “Rising new executive condominium prices a concern for buyers”. Retrieved 2 Nov 2024.
8 Made For Families, “Housing Schemes and Grants”. Retrieved 2 Nov 2024.
9 HDB, “CPF Housing Grant for Executive Condominiums (ECs)”. Retrieved 3 Nov 2024.
10 HDB, “HDB Maintenance Fees: Service and Conservancy Charges in Singapore (2024)”. Retrieved 3 Nov 2024.
11 CPFB, “Why is the minimum lease period set at 20 years? Why am I not allowed to use my CPF savings to buy a property with a lease of less than 20 years when it can last me till 95?”. Retrieved 7 Nov 2024.
Disclaimers and Important Notice
This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.
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