‘Not meaningful’ to provide costs breakdown of new HDB flats: Indranee

THE government does not price new Housing and Development Board (HDB) flats to recover the cost of land and construction, but it will not be “helpful or meaningful” to provide a breakdown of their total development cost, said Second Minister for Finance and National Development Indranee Rajah in response to a parliamentary question on Monday (Nov 7).

Workers’ Party chief and Leader of the Opposition Pritam Singh had asked if the HDB would give such a breakdown for new flats, as well as the value of subsidies applied to the assessed market price of these flats.

This was in reference to a correction direction issued last month under the Protection from Online Falsehoods and Manipulation Act, regarding former GIC chief economist Yeoh Lam Keong’s social media posts about the HDB’s deficit and Singapore’s past reserves.

In a statement, the Ministry of National Development (MND) said then that the posts falsely conveyed that HDB will not incur a loss of about S$270 million from build-to-order (BTO) project Central Weave @ AMK, and that the government is free to sell state land at nominal or much lower cost than its fair market value.

On Monday, Indranee did not immediately respond to Singh’s question on the figures, but said that HDB does not profit from the sale of new flats, which are priced “significantly below market value using generous subsidies to ensure they are affordable to all Singaporeans”.

She added that HDB’s recent annual report, released on Oct 31, showed that the total amount collected from the sale of flats is less than the cost of HDB’s building programme and the amount of housing grants disbursed each year.

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“As a result, HDB incurs a net deficit in the development and sale of new flats,” she said. In the financial years of 2021 and 2022, HDB posted a net deficit of S$4.4 billion, a record high and almost double that of the previous financial year. The deficit from its home ownership programme alone amounted to S$3.9 billion.

When Singh pressed for a breakdown of HDB’s development costs, Indranee said that affordability is what matters to buyers, and BTOs are sold below market value. A breakdown of costs for all new flats “is not meaningful” as prices vary across areas, she said.

Singh later asked why the HDB does not disclose the house price to income ratio – a measure of affordability – for BTO flats in mature estates. The HDB earlier said that the current house price to income ratio for new flats in non-mature estates is less than five times. Indranee requested that Singh file a separate question on the matter.

Earlier, replying to a separate question by Progress Singapore Party Non-Constituency MP Leong Mun Wai, Indranee emphasised that “the government does not profit from the sale of state land developed into public housing”. Rather, HDB purchases the land from the government at a “fair market value” to prevent Singapore’s past reserves from being depleted, she said.

All state land forms part of Singapore’s reserves, and when sold, the physical asset is converted into a financial asset for further investment by the government, she said. The land reverts to the government once its lease expires, with the earlier financial proceeds used to “make up for the state’s loss of the use of the land for 99 years, not for the state giving up the land forever”.

An MND spokesperson said that the extent of BTO subsidies varies across launches as flat supply and market conditions differ.

“Our overriding aim is to ensure that despite the different attributes, flats are broadly affordable,” they added.

In the first half of 2022, MND said for flat buyers collecting keys to new flats, 90 per cent of those in non-mature estates and more than 80 per cent of those in mature estates had a mortgage servicing ratio of 25 per cent or lower for their HDB loans.