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SINGAPORE - After record Executive Condominium (EC) prices which made headlines in recent weeks, National Development Minister Khaw Boon Wan yesterday called on developers to bear in mind the "spirit of the EC policy" and the policy's intent.
With the Government allowing developers to buy land designated for EC developments at a cheaper rate compared to private condominium land, the "EC is to help Singaporean families earning within S$12,000 per month acquire a condominium at below market rate", he wrote on his blog.
Referring to the leeway given to developers in terms of the design and pricing of EC units, Mr Khaw added: "We provide EC developers with much flexibility, but they must be mindful that flexibility must be exercised in keeping with the intent and spirit of the EC policy."
EC applicants must meet certain income criteria and not have already bought two subsidised flats before.
On Oct 26, a 2,716 sq ft, double-storey EC penthouse at 1 Canberra was reportedly sold for a record S$1.61 million. Less than a week later, a 2,845 sq ft penthouse at Heron Bay was sold for S$1.77m.
Without naming the projects, Mr Khaw said the record price of S$1.77 million has "raised some eyebrows" and added that he expects the developer of an upcoming project featuring a "luxurious" penthouse to have "done his calculations, to ensure that the unit will be affordable for the targeted EC applicants".
On Thursday, CityLife@Tampines, an EC which has a 4,349-sq-ft penthouse, will be open for online applications. When contacted, the developers of Heron Bay and CityLife@Tampines declined to comment on Mr Khaw's remarks.
Nevertheless, analysts pointed out that developers are essentially profit-driven and despite the recent media reports on EC penthouses, the bulk of units are designed to cater to the typical buyer with monthly household income of up to S$12,000.
Both ERA Realty Key Executive Officer Eugene Lim and Chesterton Suntec International Director of Research Consultancy Colin Tan pointed out that although cheaper than private condominium land, EC land prices have gone up and are subject to a competitive bidding process.
"Developers are taking the risk and you cannot expect them not to reap the rewards of taking the risk," said Mr Tan. "Nobody deliberately sets out to make less profits."
Mr Tan noted that the Housing and Development Board (HDB) has also priced unsold flats at The Pinnacle@Duxton "according to what the market will bear" - similar to what the developers are doing. When the public housing development was first launched in 2004, the price for a unit was up to S$439,400.
In September's Sale of Balance Flats exercise, prices for the Pinnacle units are from S$652,000 each, excluding grants.
"If (the Government) wants developers to heed the call to be more reasonable in pricing, then it should start with HDB first," Mr Tan said.
Adding that first-timers make up less than 40 per cent of EC buyers, Mr Lim said that given the flexibility, developers will be inclined to design ECs to appeal to a wider range of homehunters. "Bear in mind buyers who fall within the income ceiling, who could be upgraders who have got money because their property has appreciated in value," said Mr Lim.
With the Government allowing developers to buy land designated for EC developments at a cheaper rate compared to private condominium land, the "EC is to help Singaporean families earning within S$12,000 per month acquire a condominium at below market rate", he wrote on his blog.
Referring to the leeway given to developers in terms of the design and pricing of EC units, Mr Khaw added: "We provide EC developers with much flexibility, but they must be mindful that flexibility must be exercised in keeping with the intent and spirit of the EC policy."
EC applicants must meet certain income criteria and not have already bought two subsidised flats before.
On Oct 26, a 2,716 sq ft, double-storey EC penthouse at 1 Canberra was reportedly sold for a record S$1.61 million. Less than a week later, a 2,845 sq ft penthouse at Heron Bay was sold for S$1.77m.
Without naming the projects, Mr Khaw said the record price of S$1.77 million has "raised some eyebrows" and added that he expects the developer of an upcoming project featuring a "luxurious" penthouse to have "done his calculations, to ensure that the unit will be affordable for the targeted EC applicants".
On Thursday, CityLife@Tampines, an EC which has a 4,349-sq-ft penthouse, will be open for online applications. When contacted, the developers of Heron Bay and CityLife@Tampines declined to comment on Mr Khaw's remarks.
Nevertheless, analysts pointed out that developers are essentially profit-driven and despite the recent media reports on EC penthouses, the bulk of units are designed to cater to the typical buyer with monthly household income of up to S$12,000.
Both ERA Realty Key Executive Officer Eugene Lim and Chesterton Suntec International Director of Research Consultancy Colin Tan pointed out that although cheaper than private condominium land, EC land prices have gone up and are subject to a competitive bidding process.
"Developers are taking the risk and you cannot expect them not to reap the rewards of taking the risk," said Mr Tan. "Nobody deliberately sets out to make less profits."
Mr Tan noted that the Housing and Development Board (HDB) has also priced unsold flats at The Pinnacle@Duxton "according to what the market will bear" - similar to what the developers are doing. When the public housing development was first launched in 2004, the price for a unit was up to S$439,400.
In September's Sale of Balance Flats exercise, prices for the Pinnacle units are from S$652,000 each, excluding grants.
"If (the Government) wants developers to heed the call to be more reasonable in pricing, then it should start with HDB first," Mr Tan said.
Adding that first-timers make up less than 40 per cent of EC buyers, Mr Lim said that given the flexibility, developers will be inclined to design ECs to appeal to a wider range of homehunters. "Bear in mind buyers who fall within the income ceiling, who could be upgraders who have got money because their property has appreciated in value," said Mr Lim.
