Young couples: Is BTO your only housing option?

Apr 27, 2017

When it comes to purchasing their first home in Singapore, most couples and newlyweds go the tried-and-tested Build-To-Order (BTO) route.

But do a little homework and you will find other options available for the first-time home buyer. Apart from a BTO, you can also consider an executive condominium (EC) unit, a resale HDB flat, or even a new or resale private condominium unit.

At a recent, sold-out seminar organised by property developer MCL Land, speakers Mohamed Ismail (CEO of Propnex) and Tan KT (Associate Senior Marketing Director of Huttons) broke down the options available to young couples.

According to these real estate experts, an EC is a solid option for the first-time home buyer. Here’s why.

EC 101: A brief introduction

  • What is an EC? Essentially, a condominium built by a private developer but sold with similar subsidies and restrictions as public housing.
  • Which couples can buy an EC? Singapore citizen or citizen-PR couples buying a home for the first time. There is a limit of $14,000 on your monthly household income. Visit the HDB page for more on eligibility.
  • Can I get a housing grant? Yes, you can enjoy a CPF housing grant of up to $30,000 under certain conditions. The CPF page has further details.
  • Can I rent or sell it? During the five-year Minimum Occupation Period (MOP), you cannot sell or rent it. After five years, you can resell the EC to Singaporean citizens or PRs. After ten years, you can resell it to foreigners.
  • Why are ECs so popular? Most EC projects will be almost fully sold by the time they hit their Temporary Occupation Permit (TOP) dates. This is partly due to a limited supply of EC units over the next two years as the Singapore government slows down EC land sales. Visit the HDB page for more about the EC supply in Singapore.

EC vs. BTO

Generally, if you can afford a BTO flat, you can afford a 1- or 2-bedroom unit at an EC like Sol Acres. So how do they stack up?

Lifestyle considerations: While a BTO fulfills your basic housing needs, an EC home offers a lifestyle on top of it all. If fitness is your life, or you want that luxe holiday feel in your new home (pool view, anyone?), an EC will have you covered with its premium design and facilities.

Convenience: By now you would have heard stories about the hassle of balloting for a BTO flat and the long wait (often with a stint at your in-laws’ place) before you can finally move in. The renovation also costs money and time. For an EC, however, there is no balloting process, waiting period or extensive renovation needed. Sol Acres will be ready to move into by early next year, just in time for couples planning to wed soon.

Buy low, sell high: ECs are known for their investment potential. That’s because, like Pokémon, an EC “evolves” in status from public housing to semi-private to fully-private. When you purchase it, you enjoy similar prices and the same housing grants as with a BTO flat. Upon maturation, you can sell the EC unit at private condominium prices.

For more about potential return on investment, see the section EC vs. private condo below.

EC vs. resale HDB

Those who want to avoid the hassle and waiting of a BTO may compare a resale HDB flat with an EC unit.

Of course, as with a BTO, you won’t get the condominium lifestyle in a resale flat. But what are the other issues to consider?

Hidden costs: Buying and moving into a resale flat is very convenient… in theory, that is. The reality is, it is a “second-hand” flat after all. Bear in mind that resale units will probably have some wear and tear and might require a major renovation.

The “lugi” factor: When you buy a resale flat, you are paying a premium to the previous owner (who just made a tidy profit off you). That means the profit margin from your future sale of the unit is smaller. Therefore, EC usually beats resale HDB when you consider the potential return on investment.

EC vs. private condo

If you and your partner can afford a private condominium, why should you consider an EC?

The standard 99-year leasehold condo is physically not too different from an EC. However, there are two key financial aspects to think about.

Housing grant: Due to the hybrid public-private nature of the EC, first-time home buyers enjoy housing grants if they buy an EC. There are no government subsidies available for private condominiums.

Investment potential: ECs are available at a lower entry price compared to a private condo. A unit typically costs 20 to 30 per cent less than one at a private condo in the same area, and the initial investment is even lower if you enjoy government subsidies. That low entry price provides opportunity for substantial capital appreciation after the MOP.

The following table shows how the price gap between an EC unit and a private condo unit in the same location can narrow in just five years. This projection is based on a 2012 Singapore Real Estate Exchange (SRX) analysis of District 23 (Bukit Batok, Choa Chu Kang) EC and private condo resale prices.

Sol Acres 1BR unit Hillion Residences 1BR unit Price gap
Developer’s price (current) $380,000 $640,000 40%
After 5 years $540,000 (sold at $160,000 profit) $640,000 (assuming not sold at any profit) 16%

According to an OrangeTee report published in Today, recently matured ECs net substantial capital gains of up to 67% after the MOP (five years) and up to 166% after full privatisation (ten years). Now that is the reason eligible buyers have historically snapped up ECs even when they can afford a private condo.

So, can you afford an EC unit?

Not all ECs were created equal. Most EC developers target home upgraders such as growing or multi-generational families, so smaller (one- or two-bedroom) units that would suit newlyweds are somewhat scarce.

As the only EC with the coveted one-bedroom units available, Sol Acres has units that are affordable even for couples in their 20s.

According to Mr Tan, you only need $4,553 per month gross household income and $27,000 (about two years of full-time work) in combined CPF accounts to afford a $380,000 one-bedroom unit at Sol Acres.

Here is how he crunched those numbers:

Type of payment Mode of payment Amount (based on Sol Acres 1BR at $380,000)
5% booking Cash $19,000
15% balance CPF grant $30,000
CPF $27,000
Total outlay Cash + CPF $46,000
Household income needed
for 80% loan of 30 years

After living here for the five-year MOP, it may be time to upgrade to a more spacious home as the family grows. At that point, you will be glad you opted for an EC as you can then use the returns on your original investment to buy a larger HDB flat or a private condo unit.

To sum it up, a one-bedroom EC unit:

  • is affordable and lets you enjoy government subsidies
  • allows you to live in style during the first few years of your marriage
  • offers impressive potential returns after MOP

Interested to find out more about Sol Acres? Visit or call 8410 8816/9090 7726.

*Disclaimer: Figures shown are accurate as at the point of presentation. Terms and conditions apply.