Housing and Development Board Incurs S$2b Deficit

The Housing and Development Board (HDB) reported a deficit in its latest annual report amounting to S$2 billion. The amount is more than double the reported loss in 2008.

According to HDB, the large deficit for the fiscal year ending March was primarily because more flats are being sold. These flats are greatly subsidized by the government.

Higher cost for construction also contributed to the large deficit. Other factors that led to HDB’s loss include upgrading works for rental flats and lifts.

HDB pushed out a total of 8,000 flats based on its Build-To-Order Scheme from April 2008 to March 2009. The said volume of flats was 2,000 more than it supplied the year before.

HDB gave an update on the Lease Buyback Scheme at a media briefing for its recent annual report. The said scheme permits elderly Singaporeans with low income to avail a portion of cash as HDB repurchases the lease of their flat.

Since the scheme was introduced earlier this year, HDB has received over 400 applications. About 25,000 households qualify for the scheme but the elderly have other alternatives to monetize their units.

"Some of them will sublet their entire flat and the rental for even a three-room flat is very good nowadays. They can easily get S$1,500 per month from the rental and they (then) move in to stay with their children," said Tay Kim Poh, CEO of HDB.

According to HDB, the mortgage deficit rate dropped 0.4 percent to 7.5 percentage point, in spite of the global recession.

Market watchers explained this may be because of the steep resale rates of HDB flats.

"There was an upswing in the market since the beginning of this year. And what happens is that those households in arrears probably made use of this opportunity to sell their flat and downgrade to a flat that they can afford," said Eugene Lim, associate director of ERA Asia Pacific.