The introduction of new cooling measures to regulate the Executive Condominium (EC) scheme will encourage developers to be more conscious of the income ceiling of its potential buyers and their ability to afford the EC purchase.
With the new Mortgage Servicing Ratio cap in place, EC buyers will be affected the most. The key question now would be their ability to afford the EC as the MSR caps at 30% of the buyer’s gross monthly income.
At the same time, a new measure will see a resale levy imposed on buyers who are directly applying for EC units from developers for the second-time.
These two measures will complement each other and ensure greater uniformity between the buyers of public housing and ECs. This will encourage developers to fine-tune and adapt more appropriate land bid prices as well.
The ensuing land bids on ECs will be monitored closely; so as to observe and judge the effectiveness of the newly introduced measures in reducing the number of bids per site and/or the size or amount of the successful bids.
The new MSR cap for ECs is likely to cause a significant decrease of 50% in the purchasing power of EC buyers. Buyers who had held earlier ambition of an EC upgrade would now have to re-consider their decision.
If the MSR 30% cap were to be imposed on current EC units, affording the units would be practically impossible. As a result, EC developers are likely to construct smaller units in future, so as to ensure affordability, even despite it being at the expense of living space.