
A lot of my friends who are staying at Yishun are sharing with me about the flyers that they are getting about the upcoming North Gaia EC launch.
So before we make any big decision, it is best to sit down and explore all the various factors involved in purchasing an EC in 2022.
In the past, the idea of purchasing of an EC might be a no-brainer. An EC has always been considered a good deal.
Like a certain retired Minister who said that getting an EC was similar to buying a Lexus at Toyota’s price.
But times have changed.
With developers paying increasing higher prices for land, is it still a good idea to purchase an EC today?
Let’s explore 5 factors you must consider.
#1: Mortgage Servicing Ratio (MSR)
To purchase a new launch EC in Singapore, buyers are subjected to the MSR framework.
This means they are subject to much tighter loan limits and will have to fork out more cash.
In order to be eligible to buy an EC, buyers have to a household income of $16K and below.
Assuming best case scenario, below is the maximum amount of bank loan that a couple with combined income of $16K can obtain:

The maximum loan eligible is $1.06M. In my experience, usually the maximum loan granted is lesser than this.
This means, you have to fork out about $400K-$600K in cash if you wish to purchase a 4-bedder unit.
This is because of the expected price of a 4-bedder unit for North Gaia EC might range between $1.4M to $1.5M.
#2: North Gaia EC – Estimated PSF Price
There has been news that the estimated PSF price for North Gaia EC to be $1250psf.
There is an implication to this number.
This news will mean that North Gaia EC will be the 2nd highest priced private property in Yishun.
North Gaia’s EC launch price will actually be very close to the launch price of Northpark Residences which is located directly above the largest shopping centre in Yishun.
But Northpark Residences is a fully private condo which is located within walking distance of Yishun MRT. It is one of the most convenient locations in the entire Yishun town.
However, take note that North Gaia EC is located on the edge of Yishun and is about 5-10 minutes drive away from Yishun MRT.
With an estimated PSF price of $1250psf for North Gaia EC, you have to be prepared for these prices:
- 3-bedder units price range of $1.4M to $1.5M
- 4-bedder units price range of $1.5M to $1.6M
- 5-bedder units price range of $1.6M to $1.7M
Take note the prices above is merely an estimate and might change in future.
#3: Resale Levy when Upgrading to EC from HDB
If you currently own a 4-room HDB flat and you wish to upgrade to an EC, there will be a $40,000 resale levy applicable.
When you sell off your 4-room HDB, $40K will be deducted from your sales proceeds and any shortfalls will be payable by cash.

The resale levy depends on what was your first subsidized housing.
What does this mean?
It means if you are very dependent on the sale of your HDB flat to pay off the portion that is not covered by the loan, you are walking on very dangerous ground.
You will need a significant amount of cash on-hand to make the purchase.
At the same time, your HDB price might fall by the time you are ready to collect the keys for your EC.
So all this adds further risk to the amount of cash you might have to fork out in order to complete your EC purchase.
#4: 3 Years Construction + 5 Years Minimum Occupation Period
If you are buying an EC for the purpose of exiting for solid gains, this is something you have to seriously take into consideration.
Between the point of purchase and finally exiting from your EC, it requires about an 8 year waiting period.
Contrast this to buying a private condo during its launch.
The Seller Stamp Duty (SSD) period is only for 3 years.
For example, those who bought a new launch development back in 2019, they are able to sell off their units in 2022.
This is especially so if they wish to cash out from their 6-figure gains.
For example, some buyers of Florence Residences in 2019 and 2020 – have exited with $97K to $246K in gains.

Imagine how much gains those buyers who bought in 2018 and 2019 period are sitting on?
For these buyers, they are able to exit even though Florence Residences has yet to reach TOP and technically still under construction.
So bear in mind about the longer exit strategy of buying an EC.
#5: Exit Strategy Might Not Be As Strong
For some families purchasing an EC, it might be for a long-term reason.
For example, some parents might like the idea of having Chongfu Primary School to be located within 1km of North Gaia EC.
It means a short commute for their kids and being prioritized in the early stages of Primary 1 balloting.
However, if you do plan to sell off and exit from this development for capital gains, you might be better off considering other alternative choices.
The main reason is that you have to consider who will be your future buyers who are willing to take over the EC unit from you.
There are other nearby developments within the area which might be considered as future competitors:
- Symphony Suites (660 units)
- Nine Residences (186 units)
- Northpark Residences (920 units)
The exit strategy is something you should think about.
However, if you really like this EC development and its amenities and can imagine yourself staying here for the long term due to your kids’ school needs – then you can consider this choice.
Conclusion
In the first month of an EC development launch, up to 70% of units will be prioritized for first timers.
So if you are a HDB upgrader, you might face challenges during the balloting process.
The chances are not so high that you get an EC unit of your choice. Of course, there is nothing to stop you from trying out.

The bigger concern for me is the deferred payment scheme.
The deferred payment scheme has been touted as a convenient solution by developers for property buyers.
With the deferred payment scheme, buyers need not worry about making payments until after 3 years later.
However, a lot of things can happen in 3 years.
For example, I have seen cases where EC buyers struggle to fork out the cash required because when they sold their HDB flat, there was not enough cash proceeds to cover the remaining payment due upon TOP.
How come? This was because the price of their HDB they sold was not high enough to gain enough proceeds.
Right now, with HDB prices being high – the risk might not be so obvious.
However, we wouldn’t know what HDB prices will be when the time comes for you to let go of your HDB flat.
This is the risk all HDB owners who are upgrading to an EC have to consider – because you need not sell your HDB flat immediately.
This is unlike upgrading to a private condo – you would have to dispose of your HDB flat first before you make the purchase of your next property.
Have questions on what should be your next property move?
We can arrange for a no-obligation discussion.
You can always send me your questions via whatsapp at https://wa.me/6593667909/