SINGAPORE: As homebuyers navigate Singapore's bustling property market, the choice between Build-To-Order (BTO) flats and Executive Condominiums (ECs) can be pivotal. In a recent analysis by DBS, several key factors surface that should guide potential buyers in making this important decision.

1. Personal Goals: Understanding Investment Potential

For buyers focused on capital appreciation, choosing an EC might be more beneficial. DBS highlights that ECs often present a “higher potential for price appreciation” compared to BTO flats. Recent trends show that EC projects that reached their Minimum Occupation Period (MOP) in 2023-2024 experienced median price hikes ranging from 60% to 90%. Remarkably, some 900 square feet units saw price increases exceeding S$500,000.

Historical data also suggests that the current median price of new private launches can act as a bellwether for EC resale values after they hit their MOP. Currently, the median price stands at S$2,200 per square foot, indicating promising future resale values for ECs assuming household income maintains its growth trajectory.

2. Affordability: Weighing Initial Costs

When evaluating affordability, it becomes apparent that BTO flats require a significantly lower down payment—just 10%, typically managed through an HDB loan. Conversely, ECs necessitate a heftier initial payment of 25%, usually via a bank loan.

For instance, the priciest BTO flat to date—a five-room unit at Central Weave in Ang Mo Kio—fetches S$877,000, translating to a down payment of under S$90,000. In stark contrast, a typical EC priced at S$1.4 million demands an initial outlay of around S$350,000—more than four times the BTO's down payment.

BTOs are generally the most accessible option in Singapore’s housing landscape; however, potential buyers must meet income thresholds as families earning above S$14,000 monthly, and singles exceeding S$7,000, are disqualified from subsidies.

3. Resale Conditions: Understanding Future Flexibility

Both BTOs and ECs come with a required five-year MOP before resale. However, BTO flats in the Plus and Prime categories impose stricter resale conditions, including a 10-year MOP, restrictions on renting the flat in full post-MOP, a potential resale subsidy clawback ranging from 6% to 9%, and income caps for resale eligibility.

In contrast, the resale market for EC units tends to be more accessible since they are not bound by income caps and are subject to a more lenient Total Debt Servicing Ratio (TDSR) limit of 55%. This flexibility broadens their appeal to a wider audience, including foreigners and corporate buyers.

4. Supply Levels: Availability Matters

Finally, the supply dynamics between BTOs and ECs should be clearly understood. New BTO units are introduced regularly, with launches occurring three times a year; the recent launch in October unveiled 8,573 new units. ECs, however, are made available less frequently, with only one or two projects released annually. This limited supply can affect buyer options and market competition.

As Singapore's housing market evolves, prospective buyers must weigh these critical factors when exploring their housing options. With the right knowledge and financial planning, homebuyers can make a well-informed choice that aligns with their personal and financial goals.

Stay tuned for more insights into Singapore's property market trends!