HDB ‘Lost’ Over $4.367 Billion Last Year, Almost Double the Amount the Previous Year


If you thought that the Housing Development Board (HDB) must be making a killing off selling Build-To-Order (BTO) flats, chances are, you are actually wrong.

(The only winners in the property markets are the speculators and property agents.)

In the release of its annual report on Monday (31 Oct), it was stated that the Housing Board’s deficit has reached a record-high of $4.367 billion in the financial year that ended on 31 March.

This is 86% higher than $2.346 billion from the year before.

Reasons For The Deficit

Much of the losses incurred on a yearly basis come from the Central Provident Fund (CPF) housing grants and the subsidies given under the home ownership programme, said HDB.

For the most recent fiscal year, these grants and subsidies account for $3.85 billion of the deficit.

The first reason why there is greater deficit in 2021 than 2020 is because 66% more BTO projects began development in 2021 and more flats were sold, and correspondingly, more subsidies and grants were provided to the buyers.

Subsidies and grants are akin to leaks in the flow of money—once it is given, it is money that is never returning to the system. Hence, it is considered a type of loss.

The second reason has to do with how BTO flats are priced.

In a Parliament session, National Development Minister Desmond Lee revealed that BTO flats are not priced based on the total development costs, which is composed of the construction cost and land cost.

Rather, HDB determines the market value of the new flats by looking at the rates of comparable resale flats nearby, before applying a significant subsidy to ensure that the flats are affordable.

This is done by capping that the purchase price of BTO flats at five times the annual household income of those staying at these comparable flats, or lesser than that, while taking into account the pricing of various flat types on offer.

Therefore, the price range listed during every BTO exercise is fixed (kind of), and regardless of what happens between the placed order and the completion of the project, the buyer will still be paying for the flat based on its original price range.

Due to the COVID-19 pandemic and other macroeconomic factors (rising energy prices, global inflation, etc.), construction costs have increased.

As such, about $2.262 billion of the $3.85 billion deficit likely stems from the fact that the new BTO projects are being built while the construction costs are higher.

Compared to 2019 and 2020, the construction costs have increased by around 30%, and the HDB has absorbed these costs for the most part.


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Meanwhile, CPF housing grants amounting to $849 million were provided to buyers of HDB resale flats and executive condominiums, an increase from $791 million the year before.

As a matter of fact, most first-time homeowners use less than a quarter of their monthly income to service their housing loans due to the CPF housing grants, which means that there is very little cash payment involved.

Upgrading programmes such as Home Improvement Programme and Life Upgrading Programme has also caused an $392 million deficit.

After all, residents don’t have to pay for these upgrades, nor do the cost of these upgrades reflect on their bills.

Besides that, $352 million have also been spent on improving carparks and rebuilding drains.


In order to keep the Housing Board up and running—as opposed to caving from debt—the development board receives a grant from the Finance Ministry every year to cover the deficit.

In the latest financial year, HDB was handed a grant of $4.4 million, up from $2.346 billion the year before.

The HDB has been working at a constant deficit, since they have received at least $42.97 billion in grants since its founding in 1960.

In truth, the HDB does try to keep housing affordable by increasing the supply, but it cannot control the market demand and the rising prices.

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