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HDB posts record deficit of S$4.37b in FY2021, shortfall set to rise further in coming years with more BTO launches

SINGAPORE — The Housing and Development Board (HDB) recorded its highest overall deficit of S$4.37 billion for the 2021 financial year, with the shortfall looking set to grow in the coming years as the public housing agency ramps up its building of new flats.

The Housing and Development Board saw a net increase of S$2.26 billion in "foreseeable loss" for flats now under development.
The Housing and Development Board saw a net increase of S$2.26 billion in "foreseeable loss" for flats now under development.
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  • HDB recorded its highest overall deficit of S$4.37 billion for the 2021 financial year
  • The bulk of the deficit was incurred for the Home Ownership programme, which includes the building of more BTO flats and subsidies for such flats
  • HDB also incurred losses from the rental of flats and upgrading programmes
  • Its overall deficit is likely to grow, given that it plans to launch more BTO flats in the coming years

SINGAPORE — The Housing and Development Board (HDB) recorded its highest overall deficit of S$4.37 billion for the 2021 financial year, with the shortfall looking set to grow in the coming years as the public housing agency ramps up its building of new flats.

In a press release on Monday (Oct 31) to accompany the release of its annual report, HDB said that the bulk of the deficit, which excludes government grants, was due to the commencement of more new Build-To-Order (BTO) projects and their accompanying subsidies.

Measures to ease construction costs and the disruption in supply of building materials during the Covid-19 pandemic under the agency’s Home Ownership programme also contributed to the bulk of the deficit, it said.

In total, the losses under HDB’s 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, amounted to a total of S$3.85 billion.

This figure, which the agency had previously disclosed, is almost double the S$1.95 billion deficit recorded for the 2020 financial year.

National Development Minister Desmond Lee said that HDB’s “substantial deficit” under the Home Ownership programme shows its “commitment to ensuring that public housing remains affordable, accessible and inclusive”.

LOSSES UNDER HOME OWNERSHIP PROGRAMME

In its press release, HDB provided a breakdown of the losses under the Home Ownership programme.

The agency saw a net increase of S$2.26 billion in "foreseeable loss" for flats now under development. This was due to the start of new development projects as well as subsidies and housing grants provided for these projects.

Mr Lee said before that the development loss for the 896-unit Central Weave@Ang Mo Kio BTO project, which made the news for its record high maximum launch price for a five-room flat, would be S$250 million, excluding housing grants for eligible buyers.

This means that the subsidy for each unit of the project, which was launched in August this year, is S$279,000 on average, before accounting for housing grants.

The expected loss for flats now under development is also due to financial assistance extended to contractors hit by Covid-19, as well as measures to address the disruption in supply of building materials due to the pandemic, HDB said.

In addition, HDB also made a gross loss of S$659 million on the sale of flats completed in the last financial year and a S$849 million loss due to the disbursement of Central Provident Fund housing grants to buyers of resale flats and executive condominiums.

OTHER LOSSES

On top of the losses under the Home Ownership programme, HDB said that it incurred a deficit of S$121 million from the rental of HDB flats to eligible tenants under the various rental housing schemes.

It also incurred a deficit of S$392 million for its upgrading programmes, 60 per cent more than the S$242 million deficit from the preceding financial year.

Its upgrading programmes include the Home Improvement Programme, the Neighbourhood Renewal Programme and the Lift Upgrading Programme.

HDB attributed the increase in deficit for upgrading programmes to the higher expenditure on the Home Improvement Programme. It added that construction activities under the programme had picked up with the easing of Covid-19 regulations.

HDB also recorded an increased deficit of S$352 million for "residential ancillary functions" in the 2021 financial year, higher than the S$307 million from the previous financial year.

Residential ancillary functions included the provision and management of facilities such as car parks in housing estates and planning and building administration.

HDB’S OVERALL DEFICIT LIKELY TO GROW

HDB’s overall deficit looks set to grow in light of the agency’s plans to launch more BTO flats in the coming years.

In response to TODAY’s queries, the housing authority said that the number of flats supplied and the prevailing market conditions affecting the development costs will have an impact on its deficit.

It added that the Government subsidises HDB flats with price discounts for new flats. Flat buyers are also given housing grants.

Together, these housing subsidies result in it incurring deficits every financial year for its Home Ownership programme.

“HDB will ramp up the supply of new BTO flats over the next two years to meet the strong housing demand from Singaporean households. We plan to launch up to 23,000 flats per year in 2022 and 2023 across mature and non-mature towns.

“Looking ahead, we are prepared to launch up to 100,000 flats in total from 2021 to 2025, if needed, subject to prevailing demand,” it said.

Last year, HDB launched 17,000 new housing projects and delivered about 14,500 new flats.

Related topics

HDB BTO property

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