As ECs are pretty much condominiums with added restrictions, there is an imbedded capital appreciation mechanism as sale restrictions are lifted. After the 5 year and 10 year mark, the price of an EC tends to ‘catch up’ with a private condominium.
Based on an analysis on a basket of comparable ECs and condos, the average price gap between new condominiums and ECs is found to start at around 20% (or more). This means a typically new EC is sold at a 20% discount to a comparable new private condominium. The large price gap at launch price can be largely attributed to the sale restrictions imposed on ECs and the difference in land and construction costs. Unlike private condos, ECs still fall under the purview of the government and developers have to be conservative in their pricing.
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