EC prices might become unrealistic in the future.

EC prices have been increasing, and beyond demand and supply factors, the 2 key factors driving this increase are rising land prices and construction costs. As developers are still businesses at the end of the day, the higher costs which they absorb are ultimately passed on to buyers in order protect their margins.

To answer the question if the price growth is sustainable. The short answer is, not likely in the long run. Here's why.

The income ceiling ($16,000) for EC buyers will eventually become a constraint. With MSR restrictions and a fixed income cap, buyers’ loan amounts will be capped at a certain amount as well. This means that buyers must top up more from their hard-earned savings or CPF. As such, affordability will be compromised in the long run when families struggle to top up for the excess amount that their maxed out loans fail to cover. (Basically, loan to value will decrease over time = need to top up more Cash/CPF = Affordability decreases)

While the Deferred Payment Scheme (DPS) for ECs provides some relief, it’s available only for a limited selection of units, so not everyone benefits. As for solutions, there are a few ways this could go. Management of land prices or adjustment of affordability levers like the MSR or income ceiling. Interesting topic to re-visit in the future.