HDB's annual deficit rises to record S$6.8 billion in last financial year
The increased deficit for FY2023 was primarily due to a ramp-up in the supply of BTO flats, the Housing and Development Board said.
Housing and Development Board (HDB) flats in Singapore. (File photo: CNA/Calvin Oh)
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SINGAPORE: The Housing and Development Board (HDB) on Thursday (Nov 7) reported a record annual deficit of about S$6.78 billion (US$5.1 billion) for the 2023 financial year.
The FY2023 net deficit before government grants is an increase from the S$5.38 billion deficit in the previous year, said HDB in a press release.
"HDB incurs significant deficit every year as the amount collected from the sale of flats is lower than the total development cost of Build-to-Order (BTO) flats and housing grants disbursed," it added.
Of the FY2023 deficit, about S$6.23 billion was incurred for the Home Ownership segment.
This segment covers the development and sale of flats to eligible buyers under the various home ownership schemes for public housing, and disbursement of grants to eligible households.
HOME OWNERSHIP SEGMENT
The deficit for the Home Ownership segment stems mainly from the expected deficit for flats that are under development, the gross deficit on the sale of flats and the disbursement of CPF housing grants.
There was a net increase of about S$3.74 billion in the provision for the "foreseeable deficit" for flats under development in FY2023.Â
As public housing is highly subsidised, HDB incurs deficits for BTO projects even as they start development. The provision for this deficit has to be made upfront.
"This is primarily due to the continued ramp up in the supply of BTO flats, which saw about 22,700 flats commence development in FY2023, a 50 per cent increase from the 15,100 flats in FY2022," said HDB.
HDB has launched over 82,000 flats since 2021 and remains on track to offer 100,000 flats from 2021 to 2025, it added.
"Construction costs remained high, largely due to market uncertainties stemming from ongoing geopolitical conflicts, which could precipitate negative global supply and demand shocks," said the board.
HDB also incurred a higher gross deficit of about S$1.37 billion for sales completed - keys issued to buyers - in FY2023, compared with S$1.2 billion in FY2022.
This was due to higher construction costs for sales completed in FY2023 (16,844) compared with the previous year (18,478), despite fewer units sold.
This number of flat sales does not include studio apartments and flats sold on short leases, HDB added.
The Housing Board also disbursed more grants to eligible buyers of resale flats and executive condominiums in FY2023.Â
About S$999 million was handed out in FY2023, an increase of about 46 per cent compared with the S$686 million disbursed in FY2022.
HDB noted that the CPF Housing Grant was increased by up to S$30,000 from Feb 14, 2023, "to improve the affordability of resale flats for first-time buyers".
"Separately, HDB stepped up works to upgrade, repair, and spruce up rental flats for lower-income Singaporeans and those in need of housing support in FY2023," it said.
It spent about S$160 million to provide rental flats to eligible tenants under the various rental housing schemes, up from S$141 million in FY2022.
OTHER EXPENDITURE
HDB said that it regularly conducts rejuvenation and upgrading programmes for estates and flats to ensure that "HDB towns keep pace with the evolving needs of residents".
These programmes are heavily subsidised or fully funded by the government.
In FY2023, HDB spent S$396 million on upgrading programmes such as the Neighbourhood Renewal Programme, Home Improvement Programme, and Lift Upgrading Programme.
It also spent S$446 million on residential ancillary functions in FY2023, including lease administration, provision and management of facilities such as car parks in housing estates, and planning and building administration.
"HDB remains committed to keeping public housing affordable and accessible," it said.
"With the significant market discounts provided for new flats and various housing grants, eight in 10 first-timer families have been able to service their housing loans using CPF, with little or no cash payment."
HDB CEO Tan Meng Dui said that "enabling Singaporeans to own their homes remains HDB’s key priority".
"The substantial deficit incurred under the Home Ownership segment, which constitutes the bulk of our overall deficit, underscores our commitment to keep public housing affordable, accessible and inclusive for Singaporeans, even in the face of rising costs," he added.
