SINGAPORE - The executive condominium (EC) scheme cannot carry on in its current form, said National Development Minister Khaw Boon Wan, hinting that there may be changes afoot.
At a session of an Our Singapore Conversation on housing on Thursday, he noted the "sense of inequity" at the profit that EC buyers can make on their units.
First-time buyers of both ECs and Build-To-Order (BTO) flats get grants from the Housing Board, the size of which depends on their incomes. This ranges from $10,000 to $30,000 for EC buyers, and up to $60,000 for BTO buyers earning less than $1,500 a month.
But EC owners make more profit upon resale than the average flat owner, noted Mr Khaw.
"Because their upside in the current property market is so big, the subsidy they earn getting an EC compared to the subsidy that a lower-income family, through a three-room, four-room or five-room BTO... there's a substantial gap," he said.
"So there's this sense of inequity here, that the lower-income is getting less subsidy than somebody who is earning $12,000," he said, referring to the income ceiling for EC buyers. BTO buyers face a lower ceiling of $10,000.
ECs are meant for the "sandwiched" class of buyers who make too much to be eligible for BTO flats but still find private property out of reach.
This state of affairs, said Mr Khaw, goes against the principle of progressive HDB subsidies, where the lower-income should receive more. "So something is wrong somewhere," he said. "And therefore I think we cannot carry on the EC in this current (form)."
ECs are marketed and built by private developers rather than HDB. Buyers are subject to a minimum occupation period of five years, but after 10 years, ECs become private property and can be sold to foreigners.
According to data from the Singapore Real Estate Exchange, four-room flats in Chua Chu Kang appreciate faster than EC units from The Quintet - about 200 per cent compared to 90 per cent for the EC over seven years.
But EC buyers have made more profit in absolute terms: The median price of units in The Quintet rose from $478,333 in 2005 to $905,000 last year. In comparison, that of HDB four-room flats rose from $136,000 to $420,250 in the same period.
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