Singapore’s HDB reports record S$5.38 billion deficit attributing to expenditure on housing upgrades

Singapore’s Housing Development Board (HDB) has reported a record deficit of S$5.38 billion for the financial year 2022 (April 2022 to March 2023), up 23 per cent from the previous year.

According to HDB’s released annual report, the deficit has swelled due to comprehensive efforts to upgrade ageing homes, the development of new flats, and an increase in the issuance of keys to new homeowners.

The HDB said that its undertaking to rejuvenate Singapore’s public housing landscape, particularly through the Build-To-Order (BTO) scheme, continues to be a pivotal aspect of its financial outlay.

The Chairperson, Mr Bobby Chin Yoke Choong, underlined the board’s commitment to affordability, especially for first-time BTO buyers, who typically rely on CPF contributions, avoiding cash outlay.

Notably, the HDB has introduced targeted measures to support young married couples and families with children, enhancing their ballot chances and prioritizing them in housing allocations.

The Chief Executive of HDB, Tan Meng Dui, pointed out that the construction sector has faced a 40 percent surge in costs since FY2019, due to supply chain uncertainty, increased material costs, and a labor crunch. Despite the headwinds from the global economy, including the ongoing Russia-Ukraine conflict and the pandemic, Singapore’s property market has shown resilience, with HDB absorbing the increased costs to keep flat prices stable.

A significant portion of the deficit, approximately S$4.68 billion, is attributed to the anticipated losses from flats under construction, the disbursement of CPF housing grants, and the gross loss on the sale of subsidized flats. The latter saw a steep climb to $1.2 billion, nearly double from the previous fiscal year, as the number of flats sold jumped to 18,478, a 36.8 percent increase, marking the highest sales figure in half a decade.

HDB also ramped up its investment in upgrading programs to S$558 million, a marked increase from the previous year’s S$392 million. This includes the Home Improvement Programme which upgraded 33,704 flats, with a significant number of households also opting for elder-friendly installations under the Enhancement for Active Seniors program.

The board has also increased its land purchase spending to S$5.95 billion in FY2022, a notable increase from S$4.93 billion the previous year.

In addition, approximately S$141 million was spent on providing rental flats.

To address the deficit, the Ministry of Finance granted HDB S$5.389 billion, an increase from the S$4.4 billion allocated the previous year.

Looking ahead, the National Development Minister, Desmond Lee, reaffirmed the government’s commitment to maintaining affordable and accessible public housing. He introduced the Standard, Plus, Prime framework, which is set to take effect from the second half of 2024, ensuring choice public housing locations remain affordable and the housing system stays equitable and sustainable.

As part of its forward strategy, HDB maintains that it does not price flats merely to recover development costs and projects the launch of up to 23,000 new flats in 2023, with a goal of 100,000 between 2021 and 2025, reflecting a proactive stance to meet the housing demands of the future.