SINGAPORE, Oct 31 — The Housing and Development Board’s (HDB) deficit climbed yet again to a record high of S$5.38 billion (RM18.76 billion) in the financial year of 2022, as it ramped up flat supply and delivered the largest number of flats in the last five years.
The deficit for 2022 is about 23.3 per cent higher than 2021’s S$4.37 billion deficit.
In a press release today, HDB said that it had continued its ramp-up in new flat supply, with over 75,000 flats under construction in the 2022 financial year. More than 18,400 units were sold in the same period — the highest sales figure in the last five years, it added.
“We also increased housing subsidies and grants, in line with the Government’s commitment to meet strong demand from first-timer homebuyers, and to keep housing affordable,” the board said.
The Home Ownership Programme — which covers the development and sale of flats to eligible buyers under various schemes for public housing, as well as the disbursement of housing grants to eligible households of new and resale flats — contributed to the bulk of HDB’s deficit.
A total of S$4.68 billion was spent under the programme in the 2022 financial year, 22 per cent higher than the S$3.85 billion spent in 2021.
In response to TODAY’s queries, HDB said that its record deficit is largely due to higher tender prices amidst market uncertainty caused by the Russia-Ukraine conflict, and the “ensuing supply chain disruption”.
The higher costs from the continuing tight labour market and increased material cost, especially steel and concrete, were also other factors.
“As public housing is highly subsidised, HDB incurs deficits when new Build-To-Order (BTO) projects commence development as provision for loss would have to be made upfront,” added the housing board.
National Development Minister Desmond Lee said that HDB’s deficit shows its commitment to “to keep public housing affordable and accessible for Singaporeans”.
HDB chief executive officer Tan Meng Du added that one contributor to HDB’s record deficit was the significant increase in construction costs of about 40 per cent since the 2019 financial year.
“These increased costs have largely been absorbed by HDB as subsidies and grants are increased to keep flat prices affordable to support Singaporeans on their home ownership journey,” he said.
Lee had said in October 2022 that HDB incurs a significant deficit each year as the amount it collects from the sale of flats is “far less” than the cost of building and housing grants disbursed.
This was in response to a question by Non-Constituency Member of Parliament Leong Mun Wai of the Progress Singapore Party about the net loss for the Central Weave BTO project at Ang Mo Kio.
Lee said then that land costs are calculated as part of BTO projects’ costs as land forms part of the country’s past reserves.
“Hence, when HDB uses the land for development, the money that HDB will need to pay for the land must be paid back into the past reserves, which are invested and grown for future generations and are protected. The Government cannot use proceeds from land sales as revenue for spending in the budget,” he had said.
However, Lee added then that new flats are not priced based on costs.
Deficit from home ownership programme
Breaking down the losses under the Home Ownership Programme, HDB said “foreseeable loss” for flats now under development had a net increase of S$2.71 billion.
Gross loss on the completed sale of flats also almost doubled in the financial year of 2022, from S$659 million in 2021 to S$1.2 billion.
A completed sale is when keys are issued to buyers.
This increase is because HDB completed more new flats, and hence completed sales of 18,478 units in the 2022 financial year, up from 2021’s 13,506 units. These units exclude studio apartments and flats sold on short leases.
On the flip side, HDB’s disbursement of Central Provident Fund housing grants dropped from S$849 million in 2021 to S$686 million in 2022 as the number of resale transactions dropped.
Other losses incurred
HDB also spent S$141 million on various rental housing schemes, up from S$121 million in the 2021 financial year, as it increased works to repair and spruce up rental flats.
Spending on upgrading programmes also increased by more than 40 per cent in the 2022 financial year to S$558 million as compared to the previous year’s S$392 million.
Similar to the 2021 financial year, HDB said the increase was due to construction works under the Home Improvement Programme (HIP), which have increased with the easing of Covid-19 measures.
“In the 2022 financial year, 33,704 flats were upgraded under HIP, which helps residents address common maintenance issues related to ageing flats,” said the housing board.
“More than half of residents whose flats underwent HIP also opted to install elderly-friendly fittings at subsidised rates under the Enhancement for Active Seniors programme.”
Spending on “residential ancillary functions” — which include lease administration, provision and management of facilities such as car parks in housing estates, and planning and building administration — contributed S$432 million to HDB’s deficit.
This is up from S$352 million spent in the 2021 financial year. HDB said this was in part due to the upgrading of electrical supply in HDB estates, “as we caught up on the earlier delays caused by the pandemic”.
HDB said it “remains committed to keep public housing affordable and accessible”.
“In pricing new flats, the key consideration is to ensure affordability for flat buyers, especially first-timers. HDB does not price flats to recover costs,” said the housing board.
It added: “We are prepared to launch a total of 100,000 flats from 2021 to 2025 and will continue to monitor the housing demand closely and make the necessary adjustments.” — TODAY
