SINGAPORE – High construction costs and a continued ramp-up in the supply of Build-To-Order (BTO) flats led the Housing Board to report a record deficit of $6.775 billion for the 2023 financial year (FY) from April 2023 to March 2024.

       This was about 26 per cent higher than the $5.38 billion deficit the national public housing authority recorded the previous year, according to its annual report released on Nov 7.

       The bulk of the deficit – $6.225 billion – was attributed to expected losses for flats being built, disbursement of Central Provident Fund housing grants, and a gross loss on the sale of subsidised flats under its home ownership programme, HDB said in a statement on its annual report.

       The losses incurred under this programme were 33 per cent higher than the $4.68 billion deficit recorded in the previous year.

       HDB chief executive Tan Meng Dui said the deficit incurred under the home ownership segment shows the board’s commitment to keeping public housing affordable amid rising costs.

       Between April 2023 and March 2024, HDB started construction on about 22,700 BTO flats, a 50 per cent increase from the 15,100 units in the previous financial year, he added.

       Based on its annual report, HDB completed 18,450 new flats in FY2023, down 22 per cent from the 23,782 new units in the previous year. It also issued 19,345 keys to home owners, fewer than the 21,259 keys handed out the previous year.

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       Of the $6.225 billion deficit incurred in the home ownership segment, $3.738 billion stems from the expected losses for flats being built.

       The deficit was up from the $2.712 billion in FY2022. HDB said this was due to the ramp-up of BTO flats, while construction costs remained high due to market uncertainties as a result of ongoing geopolitical conflicts.

       HDB incurs a deficit because the amount it collects from buyers from the sale of flats is less than the total development costs of BTO flats and the housing grants disbursed.

       It also incurred a gross loss of $1.369 billion for the sale of flats, which HDB attributed to higher construction costs, despite fewer units being sold.

       In FY2023, 16,844 flats were sold, down 8.8 per cent from the 18,478 units sold in FY2022. These numbers exclude studio apartments and flats sold on short leases.

       Meanwhile, CPF housing grants totalling $999 million were disbursed to buyers of HDB resale flats and executive condominiums from April 2023 to March 2024, up from $686 million the year before.

       HDB noted that the CPF Housing Grant for eligible first-time buyers of resale flats rose by up to $30,000 from February 2023.

       Separately, the board spent about $160 million on the provision of rental flats, as more repairs and work were done to spruce up the units.

       It also spent $396 million on upgrading programmes, down by 29 per cent from the $558 million in the previous year.

       In its report, HDB said the decrease was due to lower expenditure on the Home Improvement Programme, as about half of the precincts under construction in FY2023 were at the tail-end of construction.

       Another $446 million was spent on areas such as lease administration and the management of facilities like carparks.

       In all, HDB incurred a total deficit of $7.226 billion, based on its financial statements. Taking into account a $444 million surplus from rental and other businesses, this brought its overall deficit to $6.775 billion.

       HDB receives a grant from the Ministry of Finance to cover its deficit each year. In the latest financial year, it received a grant of $6.79 billion, up from $5.389 billion the year before.

       Since it was set up in 1960, HDB has received $55.15 billion in grants.

       HDB said that with the significant market discounts provided for BTO flats and housing grants, eight in 10 families who are first-time flat buyers could service their HDB loans using their CPF contributions, with little or no cash payments.

       It added that it has launched more than 82,000 flats since 2021, and is on track to put 100,000 flats on the market between 2021 and 2025.

       To support these new flats, the board said in its report it will roll out 100 infrastructural projects, totalling $1.2 billion in value, to serve HDB towns such as Bayshore, Tengah, Tampines, Woodlands and the former Keppel Club site, which will form part of the Greater Southern Waterfront.

       Such projects include site preparation works and the construction of drains, sewers, roads and facilities such as bus stops.