Singaporeans seem to have a deep-rooted belief that Executive Condominiums (ECs) almost always guarantee a profit. Unlike private condominiums, buyers are able to buy ECs at a considerably more affordable price than their private counterparts.
Lilydale PHOTO: iproperty
Coupled with the option of taking a Central Provision Fund (CPF) grant when buying the EC, many Singaporeans who are unable to buy BTOs or HDB flats because their incomes exceed the income ceiling. But aren’t too comfortable with spending an exorbitant sum on a condominium yet, eye ECs as potential goldmine investment properties.
While that statement itself is debatable, Others have already published extremely detailed analyses on how realistic that belief is: what we want to do here is to go one step further by asking, for those who have decided to buy an EC while keeping in mind all the risks, when exactly should you sell your EC to maximize your profits?
In this analysis, we’ll be breaking down 12 ECs that have launched, which have obtained their Temporary Occupation Period (TOP) between the years 2003 to 2013.
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Here’s how the article is going to go:
1. We’ll present a table of these 12 ECs that show the average price per square foot (psf) of their early sales units, as well as the average price psf after 5 years, 10 years, and 15 years, where applicable.
2. We’ll then break down the data, and present their annual price appreciation percentage over the years, highlighting the key statistics of when their Minimum Occupation Periods (MOPs) have ended (5 years after the TOP date), and when the ECs have become fully privatized (10 years after the TOP date). From there, we’ll be able to see key similarities between the price appreciation of all the ECs. And from the trend, be able to conclude the peak average price appreciation for these 12 ECs.
3. Lastly, we’ll take a look at some ECs that have done either spectacularly well or badly, and speculate why these exceptions occurred.
4. We’ll conclude the article with when we believe you should sell your EC to maximize your profits.
Without further ado, let’s start!
1. Average price per square feet of ECs over 15 years
In this section, let’s take a look at how the average psf of ECs have changed since the sales of its early launch units, then at the 5-year, 10-year, and 15-year mark after it TOPs, where applicable.
Average Price per Sqft of Executive Condominiums in the past 15 years
The above table confirms a few things: firstly, ECs almost always guarantee profits, once sold after its initial MOP period has ended. There have been a few unprofitable transactions for ECs, but these occurred mostly for older ECs that aren’t on the list of 12 ECs that we’ll be analyzing today.
We can see from the table though, that on average, even after 15 years, ECs can still be sold at a profitable price, assuming you bought an early sales unit.
Another thing we observe is that the average psf continues to rise until about 10 years after the TOP period. With the exception of La Casa, whose average psf dropped by roughly 6.57%. At the 15-year mark though, we see that almost all of the average psf of ECs have dropped, with the exception of Bishan Loft and The Esparis.
In summary, the table tells us this: based on the past data of these 12 ECs, ECs continue to be profitable even 15 years past its TOP date, provided you buy an early sales unit. Moreover, the average psf of ECs seem to peak around 10 years after its TOP date. Of course, the table above is just a super simple analysis and breakdown of EC data to draw out the above two conclusions.
However, it’d be pretty obvious to most that, of course profits are going to continue to rise beyond the 5-year mark, and we’ve already seen that they usually peak around the 10-year mark; what we want to know is if this rise in profits is worth the wait.
So, let’s go one step further. Let’s look at the real annual appreciation of all these ECs, and see how well they’re doing from year to year to find out exactly when their price appreciation stagnates and decreases. And based on past data, when exactly you should sell your house to fully maximize your profits.
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2. Annual percentage change in average psf of ECs
First of all, you might be asking why this annual appreciation analysis is even necessary? Wouldn’t most simply want to know when the price of their unit peaks so they can sell it at the highest possible price to obtain the maximum profit?
Well, you’re correct; most people would use the above method to obtain profit in hard cash. And use part of the money earned to upgrade to perhaps a bigger condominium, or even a large HDB flat. However, some people may prefer to sell their EC unit once it has hit its peak appreciation rate, rather than its peak price.
This is so that they can use the money they have earned from the transaction to perhaps buy another property that can reap higher returns in the future, and have better price appreciation prospects. These people are likely either investors, or small families who do not mind moving around to gain the maximum returns from selling their properties.
Still confused about this appreciation thing? Let’s take a look at Bishan Loft in hard numbers.
Bishan Loft Average Price PSF
We can see that it experienced the greatest appreciation of 24% between 2009 to 2010, with its average price psf increasing by about $158 from its previous year. From 2010 to 2009, although its average price psf increases still by about $144, this increase in price is less than that (by $14) of the previous year, and thus the price appreciation is only 18%.
Basically, an increase in the average price psf only guarantees that the price appreciation is a positive percentage. But does not necessarily mean that price appreciation has peaked. We hope this explanation makes things a little clearer for you!
With that out of the way, without further ado, let’s get into the analysis. Here’s the graph we’ll be looking at:
ECs Average PSF Appreciation
The line graph may be quite a bit to take in right now, so let’s break it down into two parts:
- Appreciation at the 5-year mark, when the property first MOPs (assuming you moved in right after it TOP’d);
- And the appreciation at the 10-year mark, when the property is first fully privatized.
From the get-go, we see two pretty obvious trends at the 5-year mark: One group of ECs see their price appreciation continue to increase between the 5-year mark until the 7-year mark, while another sees their price appreciation immediately drop after the 5-year mark has been reached.
For both groups though, the price appreciation generally never peaks again, with the exception of Park Green between Y13 and Y14.
While there are various factors and reasons that can account for this discrepancy, when we look at the overarching trend, we can basically conclude that peak appreciation rate is hit right when the property MOPs, until about 2 years after its MOP.
After that, from the data of the 12 ECs gathered above, we see the increase in the average psf of its units slowly decrease.
Let’s take a look at what was just said in a group bar chart format:
For the first five ECs in this list, we see the price appreciation peak in Y5
whereas for the next five ECs, the peak appreciation can be seen to peak around Y6.
In Y7, the price appreciation is still a positive percentage
but we can see that in Y10 and beyond, the average price psf mostly depreciates, or appreciates at a very low rate.
TLDR; the peak appreciation rate is reached on the year that the property MOPs, and within 1 year its MOP.
3. Analyzing another observable trend and one outlier
Another slightly less obvious trend we can observe is that some ECs see their price appreciation percentages slowly increase again at the 10 to 12-year mark. Let’s take a look:
This is just the zoomed-in version of the data, though – if you go back to the first line graph we presented, we can observe that this price appreciation is quite minimal compared to what it was around its MOP period.
The useful information we can draw from this graph, though, is that if the price of your EC has been steadily decreasing and you haven’t sold it yet, you may want to hold on to it for a little while longer until the Y10 to Y11 period, where the price of your unit just might increase by a little bit again.
This, however, is definitely not a one hundred percent guarantee (is there anything in the world that is?), and out of twelve ECs, we’ve only seen this trend in four – what we would advise you to do if this scenario applies to you, is to talk to us: leave your contact details down below and we’ll contact you shortly, help you thoroughly analyze the circumstances surrounding your EC unit, and recommend the best possible solution.
One anomaly we’d like to bring to the table for discussion today is Bishan Loft, and in particular, how much its average price psf has increased over the past 15 years.
Its average price psf declined a little between 2014 and 2017, but bounced back in 2018 to $1129. When it first TOP-d, the average price psf of its early sales units was about $440.8.
That means that between 2003 and 2018, Bishan Loft saw a whopping 156% increase in average price psf. That’s a pretty insane profit margin, considering one square foot increased in price by about $700 alone.
So what are some reasons as to why the average price psf of units in Bishan Loft shot up, and continues to rise even now?
We’ll be taking a look at that in our next article; stay tuned for that piece!
To sum up the entire article, two conclusions can be made:
a. According to the data drawn from the past transactions of these 12 ECs mentioned above, the peak average psf is usually reached around 10 years after it TOPs, after which it declines, with Bishan Loft and The Esparis being the two exceptions to this conclusion.
b. Similarly, we see that the peak price psf appreciation is reached right after its MOP has been reached, and within 1 year after the MOP has been completed.
Therefore, here’s what Home Quarters recommends:
Regarding the first case, if you’ve bought the EC with the intention of upgrading to, for example, a condo or a larger HDB flat in a prime location, we’d highly recommend you to sell your EC after 10 years, as that’s when you’ll get the highest profit margin in hard cash as compared to other years.
Keep in mind, though, that this conclusion we have drawn is just based on data on these 12 years; we’ve already seen Bishan Loft and The Esparis as exceptions where their prices have continued to rise even at the 15-year mark, which means that the opposite can also hold true: the average psf of ECs may decline before the 10-year mark has been reached in the future.
With regards to the second case, if you’re a property investor or you’re willing to change properties often to achieve maximum returns, selling your unit the moment it MOPs or within 1 year of its MOP period would be best, as peak average price appreciation is reached around that period.
By selling your property at that period, you would be able to further invest the profit gained from that transaction into perhaps another property that may have higher returns than your EC unit in the next 5 to 10 years.
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Still confused about this article? We understand it’s a lot to take in – the property market is a constantly changing mass of numbers, statistics, prediction, and a little bit of luck.
However, at Home Quarters, we can provide you with various analyses, advice, and any sort of assistance you may require, whether you’re a buyer or a seller. Leave your contact details and any queries down below, and we’ll contact you ASAP.
We’d also like to let you know that all the raw data that’s contributed to the making of the charts and tables above is available to all our readers – the link to the data sets will be put down below.
Simply fill in your contact details, and you’ll immediately be able to download the files and take a look. We’d also love to hear your opinions on this article – do you think it was analyzed well and accurately? What do you disagree or agree with?
You can let us know through commenting on our YouTube video that we did on this article, sending us a quick email, or hitting us up on our Facebook and Instagram pages to shoot us a quick direct message.
That’s it for this article! Stay safe everybody, and remember, call Home Quarters and start packing!