How the Progressive Payment Scheme is Fueling High Condo Prices in Singapore

The Business Times (dated July 07, 2026) article by Leslie Yee.

Executive Summary

The article investigates the significant price gap between new, uncompleted condominiums and older resale units in Singapore. Author Leslie Yee argues that the Progressive Payment Scheme (PPS) which allows buyers to pay for uncompleted homes in stages based on construction milestones may be fueling aggressive buying behavior and driving up new condo prices. The piece suggests that requiring developers to sell units only upon completion (TOP) could level the playing field with the resale market, lower prices, and reduce risks to both buyers and the financial system.

Detailed Review and Summary

1. The Current Market Context: High Demand and Premiums

The article opens by noting Singaporeans' strong appetite for new condo launches, with sales rates often exceeding 80% to 90% during launch weekends. Consequently, new condos often command a premium of 40% or more on a per-square-foot (psf) basis compared to nearby resale units. While better layouts, new finishings, and a fresh 99-year lease contribute to this premium, the author identifies the practice of selling uncompleted units off-plan as a primary driver of the price gap.

2. The Mechanics and Impact of the Progressive Payment Scheme (PPS)

Currently, buyers of uncompleted condos typically utilize the PPS. They pay a cumulative 20% upfront, with subsequent payments tied to construction milestones. The buyer does not pay the remaining bulk (including 25% at Temporary Occupation Permit or TOP, and the final 15% at statutory completion) until much later.

* For Developers: Selling off-plan de-risks projects, locks in sales early, helps fund construction, and lowers financing costs.

* For Buyers: Because buyers do not need to immediately service the full housing loan, they often act more aggressively. Buyers may speculate on their future earning power or assume they can sell an existing property at a much higher price three years down the line when the new condo is completed.

3. Affordability and the "$3,000 PSF" Benchmark

The article questions whether $3,000 psf is the "new normal." At this rate, a standard 1,000 sq ft condo costs $3 million. Referencing the accompanying data table on 2025 household incomes, Yee points out the steep affordability challenge:

A $3 million home is about *10.1 times** the annual income of an 80th percentile household, and 12.9 times the income of a 70th percentile household.

* To finance this, an HDB upgrader would need $750,000 in equity (25%) and a $2.25 million loan. At a 2% interest rate over 25 years, the monthly repayment is a hefty $9,537.

4. Policy Implications and Potential Solutions

The author notes that buyers are taking on significant risks, betting against job market disruptions or economic downturns that could derail their future earning power or the future sale price of their current home.

The article references recent government cooling measures that targeted Executive Condominiums (ECs), such as extending the Minimum Occupation Period (MOP) to 10 years and banning the Deferred Payment Scheme (DPS) for uncompleted ECs. (Under DPS, buyers pay 20% upfront and nothing else until TOP; DPS is already banned for standard new private condos).

Conclusion/Author's Proposal: Yee questions if policymakers should intervene to cool new condo prices by only allowing new condos to be sold after they obtain TOP. This would force new condo sales to mirror the resale market—where buyers must make full payment and take possession shortly after signing the option to purchase. The author concludes that this would level the playing field, mitigate financial risks, and potentially lower prices in the housing market.

Key Takeaways

* The Price Gap: New condos are selling at a ~40% premium over resale condos.

* The Catalyst: The Progressive Payment Scheme (PPS) allows buyers to delay full loan servicing, encouraging them to buy properties that might stretch their current financial limits.

* The Financial Reality: A $3 million condo requires roughly $9,500/month in mortgage payments, posing a high burden even for 70th and 80th percentile income earners.

* The Proposed Fix: Mandating that developers can only sell condos upon completion (TOP) could curb aggressive speculation, reduce systemic financial risk, and stabilize prices.

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