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HDB deficit more than doubles to almost S$2b

SINGAPORE — As a result of the Government’s ramped-up supply of flats and higher development costs, the Housing and Development Board (HDB) has posted a deficit of almost S$2 billion in the financial year ending in March — more than double the amount in the previous financial year.

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SINGAPORE — As a result of the Government’s ramped-up supply of flats and higher development costs, the Housing and Development Board (HDB) has posted a deficit of almost S$2 billion in the financial year ending in March — more than double the amount in the previous financial year.

The deficit has increased almost 14-fold since FY2010/2011 — the financial year before the May 2011 General Election, when housing was a hot topic.

In its annual report released yesterday, the HDB reported an overall deficit of about S$1.97 billion in FY2013/2014, compared with S$797 million in FY2012/2013. The deficit was only S$443 million in FY2011/2012 and S$143 million in FY2010/2011.

Responding to TODAY’s queries, the HDB noted that it incurs deficits every financial year to provide homes for Singaporeans. It said for FY2013/2014, the bulk of the deficit — about S$1.93 billion — came from its home ownership programme, which comprises mainly the gross loss on the sale of flats, disbursement of Central Provident Fund (CPF) housing grants and the expected loss for flats that are under development.

“The higher deficit recorded for the home ownership programme is mainly due to higher expected loss for flats that are currently under construction, as more Build-to-Order (BTO) projects were awarded in FY2013/2014, coupled with higher development costs,” the HDB said.

It added: “The higher deficit on home ownership ... testifies to the HDB’s stepped-up efforts in FY2013/14 to deliver on the building programme, to help Singaporeans realise their home ownership dream and to provide homes for lower-income families.”

The overall deficit was covered by a government grant of around S$2.12 billion, about twice the amount given to the HDB in the previous financial year.

Analysts said the Government has announced it will taper the supply of flats next year, after it ramped up supply in the past few years to meet demand from first-time buyers. They noted that the Government has the financial muscle to support the deficits.

National University of Singapore’s Associate Professor Sing Tien Foo cited the increase of the income ceiling for the Special CPF Housing Grant (SHG), which was also extended to middle-income families, as a factor that caused the HDB’s deficit to balloon. The higher construction and land costs for new BTO flats could also have contributed to it, he noted.

Mr Chris Koh, director of property firm Chris International, said the HDB will carry on incurring deficits as long as the Government maintains its position of subsidising public housing. But the eye-catching deficit in FY2013/2014 is likely to be one-off, he said.

Century 21 chief executive Ku Swee Yong pointed out that the Government’s cooling measures could have led to upgraders being unable to sell off their existing flats. They may then delay collecting the keys to their bigger flats and payments to the HDB, he said.

C&H Properties key executive officer Albert Lu reiterated that the Government is financially very strong and should have no issues financing the deficit. But Assoc Prof Sing pointed out: “The increases in the Government’s allocation to the HDB will mean less will be available to other areas of public services, unless the budget surplus is expanded correspondingly to support the deficit.”

Mr Lu added that it could raise the price of new flats to reduce the deficit, but such a move would not go down well with the public.

The HDB’s annual report showed that 86,298 flats were under construction — an 18.6 per cent rise from 72,737 in FY2012/2013. As at March 31, 16,881 BTO, Selective En bloc Redevelopment Scheme and rental units had been completed, compared with 11,541 units in FY2012/2013.

About 13,300 flats were sold in FY2013/2014, about 2,780 units more than the previous financial year. The HDB recorded a gross loss of S$118 million for these sales.

It launched six BTO exercises in FY2013/2014, where a total of 24,531 units were put up for sale.

Laying out its achievements in the financial year, the HDB pointed to a new scheme launched in July last year that allows singles to apply for new two-room flats in non-mature HDB estates. As at Oct 31, about 3,700 singles have booked a unit, of which close to 600 have collected their keys.

New Three-Generation (3Gen) flats were also rolled out from September last year, with more than 500 3Gen flats launched since. As at Oct 31, 340 households have booked a unit.

The HDB said about 10,500 households have benefited from the introduction of the SHG in March 2011, with S$158 million dispensed as at Oct 31.

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