Nearly all EC resale profits of up to 300,000
Oct 20, 2022
By   Internet
  • City News
  • EC
  • resale EC
  • large EC
Abstract: ECs can achieve positive returns in the long run, but profits depend on the market cycle at the time of purchase and sale. Appreciation may be limited for those who buy at peak times.

According to the latest statistics, the vast majority of ECs make an average profit of about $300,000 at the time of resale, with larger ECs typically earning higher profits.


Analysis of data from 2007 to August of this year on the ban on buying and selling of 4,266 EC units found that 99.9% or 4,263 units made an average profit of $295,904 at resale, with 4,001 units being sold less than 10 years after purchase.


There were 1,454 units that made a profit of $200,000 to $300,000 or less at resale, and 294 units that made at least $500,000 at resale.


For this survey, records of newly sold EC units from 2007 to August 21, 2022, were analyzed for their profit and loss if resold during the same period, and costs such as legal fees and interest were not included in the calculation.


Larger ECs typically earn higher profits, with 2,717 units ranging in size from 800 square feet to less than 1,200 square feet, earning an average of $268,493 at resale.


Another 1,112 larger units ranging in size from 1,200 square feet to 1,600 square feet averaged $362,997 at resale.


The largest ECs made the most money, with 170 EC units of at least 1,600 square feet, earning an average of $455,207.


Many homebuyers feel that EC is at an affordable level, especially since the price of new private housing in the suburbs has increased significantly over the past year. Based on the low price of buying EC, many projects have been resold at a substantial profit in recent years.


EC is a mix of private and HDB housing, where the applicant's gross monthly income must not exceed $16,000, and is generally less expensive than private condominiums, with subsidies available to buyers.


However, like HDB flats, housing subsidies have purchase conditions and resale restrictions.


For example, homeowners must live in their homes for at least five years before they can sell them to Singapore citizens and permanent residents.


After 10 years, EC projects can be privatized and houses can be sold to foreigners and corporate groups.


Whether or not reselling an EC is profitable depends on the market conditions at the time of purchase or sale.


If the house price is at a low point when you buy and just at the peak when you resell, then you can make a higher profit by selling the EC. However, those who buy at the peak may have limited room for future appreciation.


So far this year, two new projects have been launched in the EC market, including North Gaia and Copen Grand in Yishun.


Copen Grand in Denga Newtown is the first popular residential project to debut after a new round of real estate cooling measures took effect on Sept. 30.


According to the Urban Redevelopment Authority, North Gaia opened in April with a median price of $1,301 per square foot.


By the end of August, 170 of the project's 616 units had been sold, with the median price of the five units sold during the month at $1,256.


Buying any asset is subject to risk, so one cannot conclude that buying EC is necessarily profitable, especially if the price trend reverses.


However, in general, most residential properties, including EC, can achieve positive returns in the long run. Location is one of the key factors. For example, ECs located in established flat areas generally have higher returns because they are supported by demand from flat promoters.


Given the higher margins of larger ECs, which are generally more expensive, the absolute profit on resale is higher.