Singapore’s Housing and Development Board (HDB) does not price new flats based on cost. It also incurs a significant deficit every year because the amount collected from selling the new flats is far less than the cost of building them and providing housing grants.
Minister for National Development Desmond Lee revealed this in Parliament today, in response to Non-constituency Member of Parliament Leong Mun Wai’s question on the government’s net profit and loss from building and selling the Central Weave @ Ang Mo Kio BTO project.
Facebook page falsely insinuated that HDB profited from sale of Central Weave BTO flats
A bit of context is required here: One month ago, a Facebook page insinuated that HDB is making profit from the sale of the Central Weave @ AMK Build-to-Order (BTO) flats.
The Protection from Online Falsehoods and Manipulation Act (POFMA) Office has issued a Correction Direction to the Facebook page and HDB has stated that it does not profit from the sale of the BTO flats.
Specific to Central Weave @ Ang Mo Kio, the minister said that HDB will incur an estimated loss of about S$270 million – S$250 million in development loss and S$20 million from extending CPF housing grants.
The estimated land cost for Central Weave @ Ang Mo Kio is about S$500 million, an amount which was determined independently by the Chief Valuer, said Minister Lee.
“Land forms part of the 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. The Government cannot use proceeds from land sales as revenue for spending in the Budget.”
So how does HDB price new flats?
According to Lee, HDB first determines their market value by considering several things:
- the prices of comparable resale flats nearby
- individual attributes of the flats
- prevailing market conditions.
Then, HDB applies a significant subsidy to the assessed market values to ensure that the new flats are affordable for first-time buyers.
On top of this, HDB provides further grants, such as the Enhanced CPF Housing Grant, Proximity Housing Grant and Step-Up CPF Housing Grant, to make it even more affordable for specific demographic groups.
HDB records a deficit every year
Because of this, HDB records a deficit each year, he explained.
For the Financial Year 2021/22, HDB recorded a deficit of S$3.85 billion for its Homeownership Programme.
The average deficit incurred by HDB in the last three years from 2019 to 2021 was about S$2.68 billion a year.
Claims that HDB profits from the development and sale of HDB flats are false, Minister Lee assured.
“The Government will continue to ensure that public housing remains affordable and accessible for all Singaporeans.”