![](\"http:\/\/i0.wp.com\/www.siamlandbank.com\/propertynews\/wp-content\/uploads\/2017\/01\/Estimated-number-of-EC-units-completing-and-vacancy-rate-for-ECs-1024x303.jpg?fit=1024%2C303\")
\nCrowd viewing a model of the Treasure Crest EC.\u00a0
\n2016 was an interesting year for the EC market, with a number of projects doing extremely well due to its sound fundamentals. While the glut of units in the market has been reduced, more time is needed for the current supply to be absorbed.\u00a0
\nBy Chang Hui Chew
\nFor this analyst, executive condominiums (ECs) are one of the most fascinating property classes in Singapore. A unique public-private hybrid, ECs allow homeowners to own a product that is similar in terms of amenities and lifestyle to private condominiums, but at a lower price point, and with the ability to use government grants for their purchase.
\nAt the same time, homeowners face restrictions similar to that of HDB flat owners, which prevents them from renting out or selling their units immediately upon completion.
\nIn this edition of the Guru View, we examine the performance of this public-private housing hybrid, and see what is likely to happen in the year ahead.
\nStock and supply
\n2017 is going to be an interesting year for ECs. Together with the over 4,500 units completed in 2016, the end of this year should see over 7,400 units complete (refer to Figure 1). However, in the earlier half of this decade, the government was rather enthusiastic in releasing EC land sites, and developers in turn bid aggressively for the plots.
\nCoupled with a more restrictive mortgage servicing ratio (MSR) of 30 percent, part of the suite of cooling measures to curb inflating property prices, the EC market was in much of a state of oversupply from 2014.
\nIn Q3 2014, EC vacancy rates rose to 16.2 percent, a record high (refer to Figure 2). In general, a vacancy rate above 10 percent is considered high. Since then, it has declined, albeit in part due to seasonal factors. The most recent reported vacancy rate for the property class is from Q3 2016, at 10.8 percent, a slight year-on-year increase from Q3 2015\u2019s 10.5 percent.
\nTo reduce the supply in the market, and to give current stock a chance to clear, the Singapore government has been reducing the number of EC land sites released.\u00a0 In 2016, only two EC sites were launched, with both subsequently won by Hoi Hup. In comparison, there were three EC land sales in 2015, which was already down from the seven sites that entered developers\u2019 land banks in 2014.
\nThe state has not put up any EC land on the confirmed list in the Government Land Sales (GLS) programme for H1 2017. There is only one EC site on the reserve list, located at Sumang Walk. This means that a developer would need to agree to a reserve price stipulated by the government, before it can be triggered for sale. This is another sign of the government moving to restrict the supply of ECs in the market.
\nGiven that the Singapore government has reiterated that measures which enforce financial prudence, such as Total Debt Servicing Ratio (TDSR), are here to stay, it is definitely a good sign for the overall EC market that the supply of units has been tapered, to help bring some equilibrium into the situation.
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