Singapore Public Housing developer, the Housing Development Board (HDB), announced on Monday that HDB deficit doubled to a record $4.367 billion in the financial year ended March 31 2022.
This is about 86 per cent higher than $2.346 billion the year before.
The bulk of the losses, is due to the sale of subsidised HDB flats under the famous “Home Ownership Programme“.
This amount is about $3.85 billion and the main causes are largely due to the subsidies applied on new flats, the disbursement of housing grants, more units commencing development and increased construction costs due to the Covid-19 pandemic.
This loss under the “Home Ownership Programme” is almost double the $1.95 billion loss in the previous year.
There are 66% more Build-To-Order (BTO) projects in 2021 and as more flats were sold, this also meant that more subsidies and CPF housing grants are provided to HDB home buyers. And hence more losses.
Reasons for HDB Deficit Doubled to $4.3. Billion
Several reasons were given for the increase in the HDB Deficit
HDB deficit doubled – Construction Costs Loss
Of the $3.85 billion deficit incurred under the Home Ownership segment, about $2.262 billion stems from the expected loss for flats being built due to higher construction costs, which has increased by about 30 per cent since the 2019/2020 financial year. HDB said it has largely absorbed the increase in costs.
HDB deficit doubled – Sale of Flat Loss
HDB incurred a gross loss of $659 million for the sale of flats, up from $356 million the year before. In 2021, about 15,000 flats were completed and handed over to buyers, up from the 8,124 units the previous year.
HDB deficit doubled – CPF Housing Grants Disbursed
CPF housing grants amounting to $849 million were disbursed to buyers of HDB resale flats and executive condominiums, compared with $791 million the year before.
HDB’s deficit doubled – HIP and LUP Deficit
HDB also incurred a $392 million deficit for upgrading programmes such as the Home Improvement Programme and Lift Upgrading Programme.
HDB’s deficit doubled – Car Park Improvements
$352 million was spent on works such as carpark improvements and rebuilding drains in HDB estates.
HDB’s deficit doubled – Help for Home Owners and Shop Owners
There were more help for home owners, such as the suspension of late payment charges, which amounted to $15 million. Shop owners who were given rental waivers also cost $115 million.
Who Pays for the Deficit
HDB actually received a grant from the Finance Ministry (and hence taxpayers’ monies) to cover its deficit. The deficit has grown every year, except in the 2020/2021 financial year.
Cooling Measures and HDB impact
On 30th Sep 2022, the Singapore authorities announced a series of Property Cooling Measures. The question is now which is more affected, HDB flats or Private Property.
Nevertheless, with raising costs and increase in number of flats being built to house more and more people in Singapore, the HDB deficit should be expected to increase more.
