Commentary: Why executive condominiums still offer a valid alternative for the 'sandwich' class

SINGAPORE: Executive condominiums (ECs) were first introduced in 1995 as a “fresh approach”, in the words of then-Prime Minister Goh Chok Tong, to meet rising demand for private homes.

Built by private developers with condominium-like amenities but sold under Housing and Development Board (HDB) regulations, the unique hybrid housing type was meant to be a more affordable option for the "sandwich class" who aspired to buy a private home but lacked the means to do so. EC units are typically priced about 20 to 30 per cent below comparable private condominiums.

More than 30 years on, however, a sharp run-up in EC prices has prompted concerns about affordability, as well as a recent round of policy changes. Against this backdrop, questions have emerged about the relevance of ECs as a housing option for middle-class families it was created to serve.

These are valid concerns, but it may be too early to write off ECs as irrelevant.

RISING PRICES

Official data showed the median price of new EC units more than doubled over the past decade, from S$782 (US$615) per sq ft (psf) in 2016 to S$1,843 psf in the first three months of this year.

A record was set at the launch of Rivelle Tampines in March, when nearly 93 per cent of its 572 units were snapped up on launch day at an average price of S$1,893 psf. This translated into record-breaking new launch sale prices of about S$2.8 million for a five-bedroom unit and S$2.1 million for a four-bedroom unit.

Such eye-watering prices inevitably fuel affordability concerns given how eligible EC buyers face a S$16,000 income threshold and a mortgage servicing ratio of 30 per cent. The latter restricts the amount one can spend on mortgage repayments.

Take Rivelle Tampines as an example: A family with a monthly income of S$16,000 and keen on the S$2.1 million four-bedroom unit would only be able to borrow slightly more than S$1 million on a 30-year bank loan with an annual interest rate of 4 per cent. This leaves the buyers having to pay the balance of about S$1 million, or nearly half of the purchase price, in cash and Central Provident Fund savings.

In this case, first-time buyers will find it especially hard to afford a new EC unit unless they can accrue substantial savings or receive support from their families. This probably explains why the number of first-timers in EC projects fell from about half in 2020 to between 30 and 40 per cent in recent launches.

IMPACT OF POLICY TWEAKS

The policy changes announced on May 8 can be seen as a response to this issue.

The new measures include a higher quota and longer priority period for first-time buyers, as well as the scrapping of the deferred payment scheme. These should help to ease demand from second-time buyers who typically have larger budgets as they can tap the proceeds of their first homes and have contributed to the robust take-up of new projects such as Rivelle Tampines.

In addition, the minimum occupation period for ECs will now be extended from five to 10 years. This is expected to dampen demand from those with investment motives and plans to “flip” their units for quick gains after the minimum occupation period.

Official data showed among ECs that were transacted on the open market from 2021 to 2025, about 75 per cent were sold within five years after their minimum occupation period, up from 45 per cent over the preceding five-year period.

Aside from being seen as a stepping stone to private housing, ECs have been popular due to significant gains in resale value. Projects such as Nuovo and Bishan Loft, both launched in the 2000s, and 2017’s Hundred Palms Residences were among the best performers, with resale profits doubling after the minimum occupation period.

On the contrary, the new measures are unlikely to deter those keen on ECs to meet their family aspirations and occupation needs. In the long run, the policy tweaks will help align the market with buyers with real housing needs, rather than investment-driven demand.
 

THE RELEVANCE OF ECs

Even amid rising prices, “sandwich” families who aspire to live in condominium-like gated developments would still consider EC as a financially accessible alternative for private housing.

Based on data gathered from the Urban Redevelopment Authority’s REALIS platform, the average new-sale prices for private apartments, condominiums and ECs were S$2,887 psf, S$2,642 psf, and S$1,852, respectively, as of March 2026.

This translated into average transaction prices of S$2.7 million and S$3.1 million for new private apartments and condominiums - about S$0.8 million and $1.2 million more than a new EC going at S$1.9 million.

It is worth noting that the divergence in prices between the private and EC markets began to pick up pace in 2019. Then, the average new-sale prices for private apartments and condominiums stood at S$1.5 million and S$1.4 million, while new ECs had a S$1.2 million price tag.

The widening price difference between the private and EC markets since 2019 suggests that ECs continue to offer an alternative that bridges the private and resale HDB markets for middle-class families, enabling them to achieve upgrading aspirations.

That said, the government will need to keep a close watch on new EC launches to ensure that the “sandwich class” does not get priced out of the market. Only when the pricing gap narrows to a level where ECs are no longer an alternative will ECs enter history, like other forms of public housing such as the Design, Build and Sell Scheme (DBSS) and Housing and Urban Development Company (HUDC) scheme which were replaced when they were no longer deemed as plausible alternatives.

OTHER THINGS TO WATCH OUT FOR

Moving forward, private developers are expected to be more prudent and take new rules into account when bidding for future government land sale (GLS) sites. The new GLS tenders after May will be a signal of the developers' response.

In addition to the new tightening measures, the government could use supply levels to regulate demand-supply imbalances in the EC market. If needed, more EC sites can be included in GLS programs to alleviate the heated demand in the EC markets.

All eyes will also be on the ongoing review of the S$14,000 income ceiling for BTO flats, which could have knock-on effects on the eligibility criteria for ECs.

Any revision would likely reflect household income growth since the last major revision in 2019 to ensure that middle-income families who may have exceeded the current ceiling caps but find private housing costly, can remain eligible for affordable housing options.

Sing Tien Foo is the Provost's Chair Professor in the Department of Real Estate at the National University of Singapore (NUS) Business School. The views in the article are those of the author and do not represent the views of NUS and its affiliates.