SINGAPORE - A double-storey penthouse at 1 Canberra in Yishun was sold for $1.61 million, setting a record for new executive condominiums (ECs) and prompting one property consultancy to warn about the affordability of high-priced units.
Savills, which released the data, urged buyers to "exercise prudence" when they buy ECs that cost more than $1 million, after the four-bedroom, dual-key unit was transacted in August.
More than half of the 343 new units that fetched more than $1 million since the EC scheme was relaunched in late 2010 were sold this year, Savills' caveats data showed.
Christine Sun, senior manager of research and consultancy at Savills, said that this compares with 115 such units for the whole of last year.
Savills said that a growing number of young and affluent buyers are going for bigger and more high-end units that offer perks, such as spacious balconies and unobstructed views.
"The rising trend for such luxurious buys could have been triggered by rock-bottom interest rates, rising incomes and many EC buyers escaping unscathed from the latest rounds of property curbs," Savills said.
The rising prices of resale flats have also deepened the pockets of many HDB dwellers, who saw ECs as the next step in upgrading.
To be sure, the higher prices are largely due to the size of some of these new ECs, analysts said.
For example, the unit price for the 1 Canberra unit, which stands at 2,716 sq ft, was $595 per square foot (psf). A 2,476 sq ft unit at The Rainforest in Choa Chu Kang, which held the previous record price of $1.58 million, has a unit price of $637 psf.
"Nowadays, to meet a variety of needs, EC's come in different sizes," said ERA Realty key executive officer Eugene Lim. "There are larger units as well as smaller units. The larger units sell at about $1 million."
These higher priced units are usually four-bedroom units or penthouses, said DTZ's head of Asia Pacific research, Chua Chor Hoon.
The prices alone may not tell the full story.
"Demand is more volatile as it depends on the number of ECs launched," Ms Chua said.
Indeed, Savills' research showed that there are more units above 1,600 sq ft on the market this year compared with the corresponding period last year.
Still, Savills is calling on homebuyers to take a cautious approach.
It said that while current interest rates are low, they are likely to go up in the future. Based on its calculations, owners who purchased a unit that cost more than $1.1 million may need to top up in cash upwards of $1,400 a month once interest rates rise above 3 per cent.
This assumes a couple earning a combined $12,000 a month, with a monthly repayment based on a 30-year loan at 80 per cent loan-to-value (LTV) ratio and a current interest rate of 1.5 per cent.
But ERA's Mr Lim said that this is a risk that applied to all forms of housing and was not unique to ECs.
Furthermore, interest rate hikes are gradual, he said, so owners have time to make adjustments.
Still, Savills asked: "Although incomes may have risen by then, and while interest rates do not increase exponentially overnight, would their finances be overstretched, especially if they have children, elderly parents to care for and other big-ticket expenses like car instalments and insurance premiums to pay?"
It also said that high-priced ECs faced price pressures with more supply coming onto market and competition from new condos in the suburban areas.
Comparatively, there could be value in similarly priced private residences that could be smaller in area but are not subjected to selling or leasing restrictions, it said.