$2m price tag not affordable for EC qualifiers
THE recent sale of a 4,349 sq ft executive condominium (EC) penthouse for $2.05 million has raised many questions that need to be answered.
The EC scheme was introduced in 1997 to cater to the "sandwiched-class" Singaporeans who exceed the HDB's income ceiling and yet have difficulty affording private housing.
According to the HDB website, the eligibility criteria for ECs include being Singaporean and being part of a family nucleus.
More significantly, the average gross monthly household income must not exceed $12,000.
The EC in question is CityLife @ Tampines, a joint venture by three developers that successfully bid $233.5 million for the land when the tender closed on May 10 last year.
According to the commonly used affordability ratio, that is, the price of the house ($2.05 million) over the annual income ($144,000), the price-to-income ratio is 14.2. Most property analysts would classify this as not affordable.
The World Bank considers a ratio of 5 or under affordable for local residents, while the United Nations has set the standard lower, at 3.
The questions that come to mind are:
- Does the HDB, the Ministry of National Development or any other government agency exercise any control over how developers design and build the ECs?
- Did the regulators approve CityLife's plan for these penthouse units? If so, are EC penthouses justified? If not, did CityLife contravene any rules?
- Do the regulators feel that CityLife's developers fulfilled the spirit of the EC scheme? If not, what are the consequences for CityLife?
Huang Shoou Chyuan (Dr)