The Housing and Development Board saw its annual deficit rise to nearly $2 billion, due to a combination of fewer flat sales, disbursement of CPF housing grants, as well as the expected loss of flats under development.
With fewer flats sold, the Housing and Development Board’s (HDB) annual deficit rose to almost $2 billion for the 2018/2019 financial year from the previous year’s $1.7 billion, reported CNA.
HDB posted a $2.4 billion deficit from its housing programmes that was offset by the $462 million surplus from its “other activities”, resulting in a deficit of $1.99 billion.
HDB incurs a deficit each year, which is entirely covered by a grant coming from the Ministry of Finance.
Majority of its deficit comes from the home ownership segment, which stands at $1.4 billion or similar to that posted in the previous year. The figure comprises disbursement of Central Provident Fund (CPF) housing grant, loss on the sale of flats as well as the expected loss for flats under development.
For the FY2018/2019, HDB sold a total of 16,608 new flats, down 38 percent from the 26,857 flats sold in the previous year.
It also disbursed $532 million in CPF housing grants, an increase from the $466 million it disbursed a year before.
HDB launched about 15,300 Build-To-Order flats across 18 projects during the period under review, including 1,620 flats within the new Tengah town.
Meanwhile, HDB’s deficit came as no surprise to analysts.
Nicholas Mak, head of research and consultancy at ERA Realty, said the deficit “comes usually from selling the flat below market price”.
“One interpretation of (the deficit) is to say that they have given larger discounts to the BTO (Build-To-Order) flats – the new flats that they sold,” he said.
Dr Steven Choo, chairman of real estate consultancy VestAsia Group and Adjunct Associate Professor at the National University of Singapore’s School of Design and Environment, also attributed the higher deficit to the recent delays in BTO launches.
The August sales exercise had been moved to September to enable home buyers to benefit from the enhanced grants and raised income ceiling.
“Because of the social mission of HDB, it is recognised that a deficit of this nature will occur. It is a recurring thing, so that’s not surprising,” explained Dr Choo.
Victor Kang, Digital Content Specialist at PropertyGuru, edited this story. To contact him about this or other stories, email email@example.com