HDB’s Deficit Hits Record High!
Hold onto your flip‑flicks, because Singapore’s Housing Development Board (HDB) announced a record‑breaking deficit of $4.367 billion for the year ending March 31—almost double the $2.346 billion it saw just last year. That’s a hefty spike, but there’s a reason behind it, and it’s not all doom and gloom.
What’s Brought the Numbers Up?
- More Build‑To‑Order (BTO) Projects – The HDB’s got a new batch of BTO sites kicking off this year, which means more construction costs, more land preparation, and just a ton of extra spending.
- Generous Subsidies & Grants – Buyers have benefited from fresh subsidies, and the HDB’s pal of public funding has popped a grand deal of grants into the budget.
- Infrastructure Upgrades – From street lighting to road widening, the HDB’s been rolling out upgrades that soak up a lot of cash.
- Strategic Investments – A few forward‑thinking projects that swashbuckle the long‑term future of the city are also getting their fair slice of the pie.
Key Highlights from the Annual Report
Here’s the scoop in plain English, just the way you’d want it:
- A $4.367 billion deficit—double the previous year’s figure.
- All build‑to‑order homes are getting started this year because the demand is real, and so is the cost.
- Many subsidies and grants have flowed into the budget, boosting accessibility for buyers.
- HDB’s strategy is to keep building, upgrading, and unlocking value for every home resident.
Why Now A Record?
While the numbers might look big, they’re part and parcel of a larger, balanced strategy. In a nutshell, the HDB is investing in the cities that people love to call home. The costs are expected to be offset by the benefits of increased home ownership and stronger community connections.
So, despite the headline‑breaking figures, the HDB is staying positive—and looking forward to a future where every new apartment is a step toward a healthier, more thriving Singapore.
Q. How and why does HDB incur a deficit every year?
Why HDB Keeps Writing Off New Builds
It might sound like a plot twist, but HDB’s new home projects are a financial headache—each one ends up as a loss. Yep, that’s the reality: building and selling flats at price points that’re purposely kept below market rates means the Department is literally losing money on every unit. The more houses sold, the deeper the hole grows.
2021/2022 – A Record‑Breaking Batch
- HDB rolled out 17,322 new flats across four sales rounds.
- Out of those, 13,506 units were finished and handed over to new owners—up from only 8,124 the previous year.
While the numbers look impressive, the financial side story is less graceful. Land and construction costs are front‑and‑center:
- Land purchase prices come straight from the state, pegged at fair market value by an independent chief valuer.
- Construction expenses run into the millions—each project is a cost‑intensive endeavour.
Money Talk: The Numbers Aren’t Adding Up
According to HDB chief executive Tan Meng Dui, the money collected from buyers is simply not enough to cover the total development costs. That, in short, leaves HDB with an annual deficit. Every year the deficit gets a little bigger—except for a lull in 2020/2021.
2020/2021 – A Tiny Breather
- The loss dipped to $2.34 billion, down from $2.66 billion the year before.
- Thankfully, the pandemic slowed construction, which oddly helped slim down the losses a bit.
So, while HDB keeps adding more units to the market, the numbers tell a story of a repeating deficit. A true challenge for the housing authority—and a reminder that economics can be wonderfully, unexpectedly complicated.
Q: Why has the deficit almost doubled?
HDB’s 2021/2022 Financial Year: Where the Money Goes
In short: The Housing & Development Board (HDB) hit a $3.85 billion deficit largely because selling subsidised flats cost them more than they earned, and the government rolled out hefty housing grants. It’s all covered by a big government boost.
Why the Numbers Look Like Boulders
- Subsidised flat sales: When HDB sells a flat, the sale price is often below market value. The difference between the sale price and the cost of building (and the grant it’s supposed to get) turns into a “gross loss” – think of it as an unwanted bill.
- New flats delivered: HDB built and handed out more units in 2021/2022 than in previous years. More units mean more grants and subsidies to cover life‑in‑stage social housing, which makes the deficit sky‑high.
- Construction costs jump: Since the 2019/2020 year, building has shot up by roughly 30 % – COVID hit the supply chain and labour. HDB took most of the hit itself.
Who’s the Big Kid in the Room?
That’s the Finance Ministry. Every year it hands over a grant that settles HDB’s deficit in full.
Grant Numbers – Marching on the Cash Train
- 2021/2022: $4.4 billion – a jump from $2.346 billion the previous year.
- Since 1960: The cumulative grants total a jaw‑dropping $42.97 billion.
Bottom Line
HDB’s big spending spree in 2021/2022 is like a huge cash‑flow roller coaster. The extra subsidies, higher construction costs, and sale losses pushed the deficit to almost $4 billion. But thanks to the Finance Ministry’s generous grant, the Board has no worries about covering the shortfall.
Q: How are new HDB flats priced?
How HDB Keeps Housing Affordable for Singaporeans
Think of HDB as a savvy bargain hunter: instead of charging you what it costs them to build a flat, they look at what similar homes in the neighbourhood are selling for and sprinkle a sizeable subsidy on top. The goal is simple – price < 5× the household’s annual income and keep each monthly mortgage payment < 25% of the household’s take–home pay.
Key Rules in the Marketplace
- House Price‑to‑Income Ratio – For BTO flats in newer estates, you’re looking at a ratio of about five or less. In plain English, you’d only pay up to five times an annual household income.
- Mortgage Servicing Ratio – Most new buyers keep their monthly loan payment down to around a quarter of their nett salary or less.
Monthly Snapshot from 2022
- Three‑room BTO – Median price around $228,000
- Four‑room BTO – Median price around $347,000
- Five‑room BTO – Median price around $473,000
Bottom line: HDB isn’t just building houses; it’s a price‑guardian that cares about the numbers that matter most to Singapore families. With those sweet marks on affordability, more people can step into the dream of homeownership without breaking the bank.
Q: Will the deficit increase next year?
HDB’s Housing Gamble: A Quick Flip‑Through of the Numbers
It’s no secret that the HDB’s finances are doing a bit of a dance. The agency says the number of flats produced and how the market is behaving can sway the bank‑balancing act.
Deficit on the Horizon
- HDB’s overall shortfall is poised to swell given its ambitious plans to push more BTO (Build‑to‑Order) units into the market.
- That move is meant to meet a boom in demand for new homes.
What’s Coming Down the Pipeline?
- Ready to roll out up to 23,000 new flat certificates in 2022 and 2023.
- On standby for a potential 100,000 new flats between 2021 and 2025, should the appetite grow.
All of this is driven by the same variables that affect construction costs: supply numbers, market sentiment, and the ever‑fluctuating demand curve.
In a Nutshell
HDB is playing the long game: the more BTO projects they kick off, the deeper the deficit might grow, but it’s also the key to keeping our housing needs satisfied.
Source: The Straits Times (Reproduction permission required).
