Just like a HDB, an EC is eligible to be sold off after hitting the 5-year mark.
But just like a HDB, a 5-year old EC can only be sold to Singaporeans and PRs.
However did you know an EC can also be sold to all Singaporeans and PRs – regardless of their age or marital status?
The HDB resale market only allows singles above 35 years old to buy or married couples.
But the 5-10 year old EC resale market is open to all except to foreigners.
Those EC cases I have handled are usually moving out due to:
- be nearer to their children’s schools
- downgrading back to a HDB flat for the bigger space like a 5-room HDB flat
- upgrading to a fully private condo
Of course, there are still many other reasons why people sell off their ECs.
But before you make any decision – it is important to weigh the various pros and cons of holding on to your property.
Keen to learn more? Read on.
Let’s explore 5 factors you should consider before you make a decision.
Factor #1: There is a bigger pool of buyers available upon the 10th year mark
At the 5th-year MOP mark, only Singaporean Citizens and SPR can buy the EC.
For foreign buyers – they will have to wait till the EC is fully privatised at the 10th year mark.
Now…. does the price shoot up when foreign buyers are eligible to buy?
Not necessarily so. Let’s take a look.
For La Casa EC, the price dropped at the 10th year mark:
Whereas for Quintet EC, the psf $ increased by an average $100psf over 5 years wait.
Both of these ECs prices do not behave the same way you might expect.
Now – how about your own current EC?
Have there been any indications that your EC has increased by more than $100psf over the last 5 years?
Check out recent transaction data to find out.
Factor #2: Foreign buyers have to pay Additional Buyer Stamp Fees of 20%
Foreign buyers also have to pay Additional Buyer Stamp fees of 20% in today’s context.
So this means they will they become more selective in their property choice and location.
If they can afford it – do you think they will prefer newer private properties or a 10-year old EC?
Perhaps some might still buy an old fully privatised EC but the location has to be attractive enough for them to consider.
Factor #3: Majority of ECs are located in the heartlands
ECs are usually located outside of the CBD and city fringe areas.
They are meant to serve Singaporean families who work and go to school in the heartland.
Bearing this factor in mind – foreign investors are less likely to buy a privatised EC as they prefer to rent out their units to other foreigners working in Singapore.
Factor #4: Selling allows you to free up your names attached to the property
EC is essentially a hybrid of private and public housing.
The public part is never more obvious than the fact that 2 names are needed – husband and wife – in order to purchase an EC.
You can also consider buying over your spouse’s share in the ownership of the EC.
Then your spouse has the option of buying a smaller private property for rental.
Your family continues to live in the EC.
Factor #5: An opportunity to cash out your gains to explore your next options
For some EC homeowners who bought first hand from the Developers – your EC can be an asset.
You see – your EC can be attractive to families who wish to explore private property.
They might not qualify for HDB or they think private property might be out of reach for them.
So your EC represents a nice compromise that they can aspire after. And for you – the EC seller – you have 2 options:
Option A:
You can choose to cash out for retirement and move to a fully paid HDB flat.
No more worries about monthly installments.
Secure the gains made and enjoy it for your retirement.
Or
Option B:
You can explore to park those gains into another investment.
If your EC has appreciated and you understand the power of compounding those gains – you do realize you can make more.
But you decide which will be the next vehicle to make these gains consistently in the future.
Because your EC will eventually age, grow older and become less attractive to potential buyers.
At the same time as you grow older – your access to financing reduces and you can only take loans with a shorter tenure.
This also means a higher down payment for your next home as you can borrow less.
Whatever your decision, you have the freedom to explore these options.
Conclusion
Always bear in mind – the 5-year mark – it represents an opportunity to release your names from the property and explore other better opportunities.
Most importantly, you have the option to secure and extract those gains.
Paper profit can disappear quietly – so do make it your responsibility to understand all these factors.
However, if you are really comfortable with your EC currently as it meets all your needs – then please continue to stay on.
Have questions? Feel free to drop me a message via the contact form.
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