SINGAPORE — No clear explanation was provided by Mr Desmond Lee, Minister for National Development, as to why the Ministry of National Development (MND) cannot provide the data for subsidies that the Housing Development Board (HDB) allocated for its HDB BTO flats in the last 12 years.
In a written Parliamentary Question by Aljunied MP Mr Pritam Singh asked the Minister for the total dollar value of housing grants and subsidies allocated by HDB in each year from 2010 to 2022 for the HDB Build-To-Order (BTO) apartments in both mature and non-mature estates respectively and how many of such flats were constructed each year.
In a separate question, the Leader of the Opposition and Workers’ Party Secretary General also asked for the total dollar value of the estimated housing grants and subsidies that will be required for the up to 100,000 new HDB BTO flats the Ministry is prepared to launch from 2021 to 2025 in mature and non-mature estates respectively; and the total number of apartments to be constructed for each category respectively.
In his written response, Mr Lee said that HDB’s overriding aim in pricing new BTO flats, is to ensure public housing remains affordable to help a broad segment of Singaporeans own their own homes. “Therefore, HDB applies a significant subsidy to the assessed market values of new flats.”
He noted that the market subsidies are not directly comparable across projects, launches and years, as they depend on prevailing market conditions, attributes of the BTO projects offered, and the prevailing household incomes. In recent years, we have increased the market subsidies so that BTO flats remain affordable, and homebuyers are protected from price fluctuations under different market conditions.
For instance, the average price of a 4-room BTO flat in a non-mature estate was $341,000 in 2019 and $342,000 in 2022, even as the Resale Price Index rose by 28% over the same period.
The table provided by Mr Lee shows the CPF housing grants given out for new HDB flats and the number of flats that commenced development in each Financial Year from 2010 to 2021.
The Minister noted that HDB also publishes the recent transacted prices of comparable resale flats alongside the BTO flat prices. The difference in prices between the comparable resale flats and subsidised flats broadly reflects the market subsidies provided for the new flats, after accounting for differences in attributes.
“It is clear that there is a significant difference between HDB BTO flat prices and comparable resale flat prices. The difference in these price ranges also explains why BTO flats are highly popular and usually over-subscribed. On top of the market subsidy applied, HDB provides the Enhanced CPF Housing Grant of up to $80,000 to help eligible flat buyers achieve their home ownership aspirations.”
The Government has kept BTOs affordable for flat buyers. First-time homebuyers generally can service their mortgage payments fully using their CPF contributions with little or no cash outlay, and home price to income (HPI) ratios are generally around four to five. This is compared to international MSR benchmarks of 30% to 35%, and HPIs of global cities which range from eight to over 20. We will continue to ensure public housing is affordable to Singaporeans.
As for the second question by Mr Singh, Mr Lee said that HDB currently provides broad information on upcoming BTO launches in the HDB Flat Portal to provide guidance to prospective flat buyers.
However, to retain flexibility in BTO supply planning, HDB does not provide estimates beyond this timeframe, as sites are subject to further staging and review, for instance, there could be development constraints such as delays to vacating interim uses and the need for environmental or heritage studies at some planned sites.
Mr Lee pointed out that the Government has kept BTOs affordable for flat buyers.
“First-time homebuyers generally can service their mortgage payments fully using their CPF contributions with little or no cash outlay, and home price to income (HPI) ratios are generally around four to five. This is compared to international MSR benchmarks of 30% to 35%, and HPIs of global cities which range from eight to over 20. We will continue to ensure public housing is affordable to Singaporeans.”
Pritam Singh asks Minister why subsidies cannot be provided
The following day after the Minister gave his written reply, Mr Singh noted that the Minister in his reply did not set out the subsidies for each year and he said he cannot understand why that information could not be made public because those subsidies are taxpayer subsidies.
“The taxpayer is actually funding the homeownership program vis a vis subsidies. And I need the minister’s understanding as to why that information cannot be given out by the ministry.”
In response, Mr Lee said, “Think we can deal with this more thoroughly in a debate on the motion, but the short answer is that if you look at every brochure when we have a launch and I’m sure the member has got residents come up to you to see which one. Three room four room, which floor. And you look at the BTO range of prices, we make the effort to put the comparable resale price next to it.”
“That is a sense of the whole range, broadly the whole range of market support and subsidies that given to Singaporeans. We have to bear in mind that based on each family’s circumstances, additional grants may or may not be available. And so it will vary not just project by project, but also on who buys them. So not just subsidies, but also grants.”
“And we have provided the cost of construction, which has put out published the overall amount of money that government uses as taxpayer dollars to fund home ownership is public information. It’s a huge figure with some breakdown. And we also put it in the brochure not just for members of Parliament, but for individual buyers to get a sense of the range of difference between the resale prices that are comparable and the prices that they are being asked to pay in a range.”
“Again, different floor, different facing, different block. And of course, as I said before, the subsidies that we provide on top of the grants will vary from launch to launch from year to year, even within the same time, because an especially when resale prices fluctuate a lot. I mean, when everything is flat, you know, roughly is all about the C but just think about it.”
“You have resale prices shooting up to 28 to 29% in the last two years. I may be getting my figures a bit wrong, but broadly, you know, the resale price are going up a lot. But look at the average BTO prices, they’ve remained relatively stable, of course, adjusting for different locations. And that must mean that you have to adjust the subsidies even for projects launched in succession in an area in order to ensure that stability.”
Mr Singh had wanted to follow up with Mr Lee’s reply but he was never picked by the Speaker of Parliament even though he had his hand raised immediately after Mr Lee had finished.
Breakdown of subsidies provided in the past by HDB
As one can see from Mr Lee’s lengthy response to Mr Singh, the question of why MND cannot reveal the subsidy amount was never answered.
Of course, one might say it would be hard to provide the figures as requested by Mr Singh.
But when former MP for Potong Pasir SMC, Chiam See Tong, asked the then-Minister for National Development, S. Dhanabalan, in 1988 if he would give the breakdown cost of the units including land cost incurred by HDB of flats constructed at six constituencies, the data was provided.
Mr S. Dhanabalan provided exact details of the breakdown in a written reply and said that the cost incurred by HDB in building its flats can be broken down into construction cost and land cost.
“Construction cost relates to the cost of the building itself, the cost of piling, the installation of electrical supply, sanitation, lifts, water supply, etc, as well as the cost of earthworks, ancillary roads, sewers and drains. Construction cost is determined by the prices of contracts tendered out by HDB.”
“Land cost is determined by the Chief Valuer based on the market values of comparable land. Land cost attributed to the flats does not include the land for commercial premises, town gardens and other non-residential uses in the HDB estate.”
The former minister noted that cost data in detail is only available since the HDB introduced the new accounting system in 1985.
In the table provided by Mr S. Dhanabalan back in 1988, we can see that HDB was able to provide the average subsidy for each of the units.
So why is it that, 34 years later, MND finds it hard to provide the same figures to Members of Parliament?
