SINGAPORE: The Housing and Development Board (HDB) recorded a deficit of S$5.38 billion (US$3.93 billion) in the 2022 financial year, of which S$4.68 billion was incurred for the Home Ownership progamme.
This scheme includes the expected loss for flats currently under development, gross loss on the sale of flats and the disbursement of Central Provident Fund (CPF) housing grants.
The record FY22 deficit, before government grant, is an increase from about S$4.37 billion in FY2021, said HDB in a press release on Tuesday (Oct 31).
HDB added it spent 22 per cent more on the Home Ownership programme in FY2022 to develop Build-to-Order (BTO) flats, and provide housing subsidies and grants, with the total amount rising from S$3.85 billion in FY2021.
HDB CEO Tan Meng Dui said: “Amidst the Russia-Ukraine conflict and severe disruptions caused by the COVID-19 pandemic, the Singapore property market stayed buoyant in 2022 with housing demand remaining strong.
“The resultant supply chain uncertainty, labour shortage and higher material cost have led to a significant increase in construction costs, of about 40 per cent since FY2019.”
He added that the increased costs have “largely been absorbed” by HDB as subsidies and grants are increased to keep flat prices affordable for Singaporeans.
Mr Tan said with HDB delivering more new flats to buyers – in 2022, it completed its largest annual number of flats and housing projects in the last five years – this has resulted in “more losses incurred from a higher number of sales completions in FY2022”.
DEFICIT UNDER HOME OWNERSHIP PROGRAMME
In FY2022, there was a net increase of about S$2.71 billion in the provision for expected loss for flats under development, compared to about S$2.26 billion in the previous financial year.
“HDB incurs significant losses every year as the amount collected from the sale of flats is lower than the total development cost of BTO flats and housing grants disbursed,” it said.
There was a higher gross loss of S$1.2 billion for sales completed in FY2022 – almost double the S$659 million figure in FY2021, said HDB.
This was due to the higher number of sales completed, with 18,478 units in FY2022 compared to 13,506 units in the previous financial year, as the construction sector progressively recovered. HDB added this represented the highest sales figure in the last five years.
HDB noted a drop in the disbursement of CPF housing grants to eligible buyers of resale and executive condominiums in FY2022 with S$686 million given out, down from S$849 million in FY2021.
“The decrease in CPF housing grants is in line with the drop in the number of resale transactions, from 30,400 cases in FY2021 to 27,900 cases in FY2022,” it said.
Separately, HDB added that it increased works to repair and improve rental flats, leading to about S$141 million spent from the provision of such flats to eligible tenants under the various rental housing schemes. This is an increase from the S$121 million spent in FY2021.
DEFICIT FROM REJUVENATION OF TOWNS, FLATS
HDB also incurred a deficit from rejuvenation and upgrading programmes of towns and flats to keep up with the changing needs of residents.
In FY2022, HDB spent S$558 million on upgrading programmes, an increase of more than 40 per cent compared to the S$392 million spent in FY2021.
The increase was a result of construction works under the Home Improvement Programme (HIP) which picked up with the easing of COVID-19 measures.
A total of 33,704 flats were upgraded under the HIP in FY2022.
Another S$432 million was spent for residential ancillary functions in FY2022, including lease administration, provision and management of facilities such as car parks in housing estates, and planning and building administration.
“This was in part due to the expenditure for the upgrading of electrical supply in HDB estates, as we caught up on the earlier delays caused by the pandemic,” said HDB.
MEETING STRONG DEMAND FOR HOUSING
HDB said on Tuesday its “key consideration” in pricing new flats is to “ensure affordability for flat buyers, especially first-timers” and it does not price flats to recover costs.
“HDB remains committed to keep public housing affordable and accessible,” it added. “With the significant market discounts and various housing grants, close to 90 per cent of first-timer families have been able to service their housing loans using CPF, with little or no cash outlay.”
It said it has been maintaining a “steady supply of BTO flats” to meet the strong demand, and is on track to launch up to 23,000 flats in 2023.
HDB is also prepared to launch a total of 100,000 flats from 2021 to 2025, and will continue to monitor the demand closely and make necessary changes.
Minister for National Development Desmond Lee noted in Tuesday’s press release that a bumper supply of nearly 10,000 flats – the largest sales launch to date – was launched in November 2022.
“We are also building more flats in prime and central locations, which naturally command higher market values given their attractive locations and attributes,” said Mr Lee.
In the second half of 2024, HDB will introduce the new Standard, Plus and Prime framework to “better reflect the locational attributes of BTO projects. The framework was first announced by Prime Minister Lee Hsien Loong at the National Day Rally in August.
The flats also come with subsidy recovery, longer minimum occupation periods and tighter conditions for resale and rental.
On the upcoming framework, Mr Lee said it will “allow us to keep public housing, including those in choice locations, affordable to Singaporeans, ensure a good social mix, and keep the system fair and sustainable”.