EC vs Resale Flat: What to do if you cannot decide

You may have heard real estate agents warning you that resale flats have poor appreciation value compared to executive condominiums.

While it may somewhat be true, there are a lot of factors that come into play when choosing a home. Capital appreciation is not the sole concern for every Singaporean. Affordability should be a huge decision-maker when choosing between a resale flat or condo. There is no point buying an EC for “better appreciation”, and then be forced to sell it when your savings run out.

There are several key cost differences that I will share with you below, in hopes of helping you make the RIGHT decision when you’re not sure to choose between an EC or resale flat.

1. Overall Price Difference

Homebuyers should be aware that on average, you will pay more than twice the price for an EC, compared to an equivalent sized resale flat.

2. Availability of Grants

Subject to eligibility, you can receive up to $70,000 in grants from HDB’s Family Grant and Proximity Housing Grant (PHG). Compared to ECs, you can only receive the family grant of up to $30,000.

You could lose out on the $10,000 Family Grant that resale flats provide compared to ECs.

3. Initial Cash Outlay

As there are no HDB loans for ECs, you will have to use a bank loan or from other financial institutions.

The main difference between ECs and resale flats is the cash component of the down payment. You need to be prepared to fork out roughly $50,000 in cash for ECs in the $1 million range.

4. Monthly Loan Repayments

HDB Loans are generally quite stable and has been about the same rate since the 1990s, compared to bank loans which have more volatile interest rates.

This is a long-term cost factor to consider when buying ECs. If interest rates stay low, you’ll pay less interest for an EC than a flat. If interest rates go up, you’ll pay more.

5. Maintenance Fees

Some of the highest conservancy fees for 5-room flats are about $90/month. For EC, it is dependent on the size and range of facilities. Some condos, which have extensive facilities will have maintenance fees of between $300-$440 per month.

6. Property Taxes

Your owner-occupied property tax rate is based on the Annual Value (AV) of your house. You can use the IRAS Tax Calculator to compute the amount. Tax on a resale flat will generally be cheaper than an EC.

7. Renovation Cost

This is subjective as it depends on how complicated your renovation is.

ECs come with basic fixtures and usually have higher-end finishing, while resale flats may need some improvements as the interior would be older.

The above is based on an average comparison between a 5-room resale flat and an executive condominium. For detailed calculation on specific properties, do contact me or your trusted real estate agent. Ultimately, in every decision, there will be pros and cons. It’s up to you to evaluate your financial standing when choosing between an EC or Resale flat.