THE Housing and Development Board’s (HDB) net deficit before government grant almost doubled to a record high of S$4.4 billion in its 2021 financial year, driven by a shortfall on its public housing programme. 

According to its annual report released on Monday (Oct 31), the deficit from its home ownership programme alone – which comprises the expected loss for flats currently being built, gross loss on the sale of flats, and Central Provident Fund (CPF) housing grants disbursed – amounted to S$3.9 billion. 

The deficit posted due to the home ownership programme in the previous financial year was about S$2 billion. 

HDB attributed the swelling deficit to an increase in development projects, together with the accompanying subsidies and housing grants for these projects, as well as measures to ease contractors’ financial pressures and address supply chain disruptions in the construction industry during the pandemic. These amounted to S$2.3 billion of the S$3.9 billion home ownership deficit. 

In FY2021, HDB launched 17,322 new flats in four batches, and it plans to put up another 23,000 new flats for sale in 2022 and 2023.

More CPF housing grants were disbursed to eligible buyers of resale flats and executive condominiums, HDB said in its press statement, up about 7.3 per cent to S$849 million from FY2020’s S$791 million. 

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Sales of flats also rose by 66 per cent in the year under review, standing at 13,506 units from 8,124 units in the previous financial year. This resulted in a wider gross loss of S$659 million for FY2021, compared with SS$356 million a year ago.  

Minister for National Development Desmond Lee said the “substantial deficit” on HDB’s home ownership programme is testament to its commitment to keeping public housing “affordable, accessible and inclusive” for Singaporeans. 

“That is why we continue to build and sell new HDB flats at prices below the market, increasing our market subsidies over this period to keep built-to-order (BTO) flat prices relatively stable, and also provide housing grants to eligible buyers of both new and resale flats,” he said. 

In its statement, HDB said it establishes the market value of new flats from comparable resale flats nearby, “and applies a significant subsidy to ensure affordability based on household incomes and prices of various types of flats offered by HDB”.

HDB noted that the current house price to income ratio for new flats offered in non-mature estates is less than five times, and mortgage servicing ratio is under 25 per cent for most new flat buyers taking HDB loans.

In the first three quarters of the year, median prices of BTO flats launched in non-mature estates were S$228,000 for three-room flats, S$347,000 for four-room flats, and S$473,000 for five-room flats, said HDB.

In its latest BTO exercise launched in August, HDB offered close to 5,000 new flats, of which about half will be built in the mature estates of Ang Mo Kio, Bukit Merah and Tampines, and the rest located in non-mature towns – Choa Chu Kang, Jurong East and Woodlands.

Prices of the new five-room flats being offered in Ang Mo Kio start at S$690,000 after grants, while such flats in Tampines start from S$490,000 after grants. A five-roomer in Choa Chu Kang starts at S$345,000 after grants.

In FY2021, HDB offered financial assistance amounting to S$15 million for homeowners in mortgage and upgrading cost arrears. It also waived rentals amounting to S$115 million for 8,500 qualifying tenants in HDB shops and social-communal facilities. 

HDB highlighted that the larger subsidies and housing grants, together with rising construction costs, which have surged 30 per cent since FY2019, widened HDB’s deficit in the past two years. 

“Most first-timer buyers therefore use less than a quarter of their monthly income to service their housing loans, and close to 90 per cent of first-timer families service their HDB loans using CPF with little or no cash payments,” it said. 

On the estate upgrading front, 53,792 units underwent the Home Improvement Programme, which addresses maintenance problems in ageing flats, and six housing projects went through the Neighbourhood Renewal Programme, which carries out precinct and block-level improvement works. 

Works were also completed across three blocks to bring direct lift access to some 140 households under the Lift Upgrading Programme, with works on track for another six blocks. 

Residential ancillary functions, such as the managing of car parks, posted a deeper deficit of S$352 million in FY2021/2022 too, compared with S$307 million in the previous financial year.

These upgrading works resulted in a deficit of S$392 million, up more than 60 per cent from FY2020’s S$242 million, said HDB.