When I was invited to write an insight piece for my agency, naturally I chose to look at the trend of EC since I am an  EC owner myself. (You can click on the image to read and understand the trends of EC, past, present & future). Well, EC has always been close to my heart, past, present and future. 

Having said that, every property choice has their own fair share of trade-offs. So here I would like to highlight some of them if you are looking at buying a new launch EC.

Financial

One of key reason why investors love real estate investment is the ability to leverage (ie. Borrowing money. While for private property, the ratio of loan to income is based on Total Debt Service Ratio (TDSR) standing at 55% while for new launch EC, the ratio is based on Mortgage Service Ratio (MSR) which is based on 30%. Here illustrating the differences.

 Eligibility Conditions needed

The eligibility conditions for a brand new EC would request 2 owners being locked into property. While it does help to support the monthly mortgage, there are cases where for some families, they could have purchase 2 properties based on their household conditions and being potentially get a more desirable location/size/convenience and the other for investment purpose.

Time

The commitment for a new launch EC includes 3-4 years of construction and a 5 years Minimum Occupation Period – a total of 8 to 9 years. For other private properties, you will not need to pay the seller stamp duty 3 years from when legally confirm your purchase (ie. Exercised your option to purchase).

A 5 years difference with both names tied in might not seems long, but if you break it down to the difference in monthly mortgage payable per month, it could be sizeable and deterring if you are potentially exploring a 2^nd property investment at a later stage.

Unknowns

There are also these unknowns too.

• What will be the built quality like for the condo?
• Will there be delay for construction for the EC and its surrounding amenities, infrastructure (e.g. Jurong Regional line)
• How will such impact affect my family? Primary school, a place for my family to stay etc
• Will there be policy changed moving forward? E.g. An increase of new EC supply that might cause price to drop?
• Will there be price fluctuation on my current asset? ie. Will my HDB price dropped 3 – 4 years later when I want to sell that will impact my finance?

So it is bad to buy new launch EC?

The answer is no. In fact, after speaking to one of my clients and advising them using the Property Life Stage framework, they made an informed and joint decision to buy a new launch EC in Punggol. They also got the direct developer’s pricing as well. (you can click on the image to read the case study)

Of course, there are also cases when I recommended no to their property plans and advised them to look at alternatives too – because there are really several considerations and property types that they can go for too. (you can click on the image to read the case study)

So what should I do next?

Every family has their own priorities, risk appetite, financial planning/commitments and aspirations, therefore, there is no one size fits all solutions.

Our mission is to help families make informed property decision. This is facilitated by our Life Stage Planning framework that aims to help map them together along with clear and concise financial assessment.

• A clear and concise understanding on the property market through past and present data.
• Aligning your goals with your family planning/prioritises with sharing of relevant case studies.
• Understanding all the options available along with the risk, pros & cons and opportunities.
• An in-depth analysis of their financial position with a comprehensive financial stress test.
• A thorough execution plan to maximise result with minimal inconvenience to your family with progress updates

Click here if you would like to make informed property decisions for your family.