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THE Housing and Development Board's (HDB) net deficit will continue to be high in the coming years as more new flats are completed and handed over to homeowners, said National Development Minister Khaw Boon Wan in parliament.
The net deficit for the year ending March 2014 came up to S$1.97 billion before government grants, much higher than the S$797 million recorded for the previous financial year and S$443 million for FY2011/12.
This spike was due to the ramp-up in its flat-building and upgrading programmes, said Mr Khaw in response to a query from West Coast GRC MP Foo Mee Har on Tuesday.
The size of the latest HDB net deficit was expected, he added, as the government continued to ramp up its building of new flats in Singapore.
But Mr Khaw said that he did not foresee the current pace of construction - about 25,000 new flats per year since 2011 - to carry on for too long, and that HDB was already beginning to scale down on its building.
Mr Khaw revealed that HDB's deficit will "continue to be high" in the next few financial years, as flats launched in the ramp-up phase are completed progressively and handed over.
"For future years, the deficit level will depend on several factors such as housing demand, HDB's building and upgrading programmes, as well as development costs and policy changes. HDB will continue to use its allocated resources judiciously to provide affordable and quality homes for Singaporeans," he told the House.
Mr Khaw explained that the net deficit is the outcome of government policies to "provide good, affordable public housing and quality living environments in HDB towns for Singaporeans".
In its annual report released last December, HDB noted that it incurred deficits every financial year to provide homes for Singaporeans, with this deficit fully covered by government grants.
"HDB operates under a deficit financing model, so whatever the deficit is for the year, we receive a grant from the MOF (Ministry of Finance) so that we can balance it out. That grant is reflected in the overall budget for the year," said Mr Khaw.
HDB's deficit is largely due to the subsidy extended to buyers of new flats and the disbursement of CPF housing grants to eligible buyers of resale flats.