SINGAPORE: The Housing and Development Board (HDB) on Thursday (Nov 7) reported a record annual deficit of around S$6.78 billion (US$5.1 billion) for financial year 2023.

There is an increase in net deficit before fiscal year 2023 government incentives from a deficit of S$5.38 billion in the previous year.HDB said in a press release.

“HDB runs a significant deficit every year as the amount raised from the sale of flats is lower than the total development cost of Built to Order (BTO) flats and housing grants given,” he added.

About S$6.23 billion of the FY23 deficit was incurred for the Home Ownership segment.

This section covers the development and sale of apartments to eligible buyers and the payment of grants to eligible households under various homeownership programs for public housing.

HOME OWNERSHIP SEGMENT

The deficit in the Home Ownership segment is mainly due to the expected shortfall for flats under development, the gross shortfall on flat sales and the disbursement of CPF housing grants.

There was a net increase of approximately S$3.74 billion against the “foreseeable shortfall” of flats under development in FY2023.

Since public housing is highly subsidized, HDB runs a deficit while BTO projects are just starting to develop. This deficit must be paid in advance.

“This is mainly due to the continued supply of BTO flats, with around 22,700 flats set to be developed in FY2023, an increase of 50 per cent from 15,100 flats in FY2022,” HDB said.

HDB has launched more than 82,000 flats since 2021 and will continue to roll out 100,000 flats from 2021 to 2025.

“Construction costs remained high, largely due to market uncertainties resulting from ongoing geopolitical conflicts, which could precipitate adverse global supply and demand shocks,” the board said.

HDB also incurred a higher gross deficit of approximately S$1.37 billion due to completed sales (keys given to buyers) in FY2023 compared to S$1.2 billion in FY2022.

This was due to construction costs for completed sales in FY 2023 (16,844) being higher compared to the prior year (18,478), despite fewer unit sales.

HDB added that these flat sales do not include studio flats and flats sold on short-term rentals.

The Housing Board also distributed more grants to eligible buyers of resale apartments and executive apartments in Fiscal Year 2023.

About S$999 million was distributed in FY2023, an increase of about 46 per cent compared to S$686 million distributed in FY2022.

HDB noted: CPF Housing Grant It has been increased by up to S$30,000 from 14 February 2023 “to improve the affordability of resale flats for first-time buyers”.

“HDB has also stepped up work to improve, repair and beautify rental flats for low-income Singaporeans and those in need of housing support in FY2023,” he said.

Spent approximately S$160 million to provide rental apartments to eligible tenants under various rental housing programs; this figure rises to S$141 million in FY2022.