The ongoing Ang Mo Kio Build-To-Order (BTO) project has been a hot topic for the past few months.
Earlier this year, a Facebook page came under fire for falsely claiming that the Housing Development Board (HDB) will stand to profit from the BTO.
In response, National Development Minister Desmond Lee revealed that HDB would incur a loss of about S$270 million from the BTO project.
This loss is due to costs of development in addition to the Central Provident Fund (CPF) housing grants HDB provided for eligible buyers.
As such, any claims of profits that HDB is allegedly gaining from the project are false.
Speaking in Parliament on Tuesday (4 Oct), Mr Lee said HDB’s losses from the BTO project amount to about S$270 million, S$250 million of which is due to development costs.
Source: MCI Singapore on YouTube
The estimated land cost for the BTO flats is around S$500 million, determined independently by the chief valuer using market valuation principles.
The land is also part of the nation’s past reserves. When HDB uses it for development, they are to pay the money for it back into the reserves.
“The Government cannot use proceeds from land sales as revenue for spending in the Budget,” he pointed out.
Mr Lee also noted that HDB does not price new flats based on the cost of developing them.
When pricing new flats, HDB… [considers] the prices of comparable resale flats nearby, as well as the individual attributes of the flats and prevailing market conditions.
To determine the selling prices, HDB applies a significant subsidy to the assessed market values to ensure the affordability of new flats for first-time buyers.
HDB has also incurred an additional loss from providing grants to buyers, Mr Lee noted. For instance, CPF housing grants resulted in a loss of around S$20 million.
The board provided grants such as the Enhanced CPF Housing Grant, Proximity Housing Grant, and Step-Up CPF Housing Grant for specific demographic groups.
“HDB incurs a significant deficit every year,” Mr Lee said.
The amount that it collects from the sale of flats is far less than the cost of its building programme and the housing grants it disburses each year.
He added that there was a deficit of S$3.85 billion for HDB’s home ownership programme for the 2021 to 2022 financial year. On average, HDB incurred a deficit of about S$2.68 billion a year from 2019 to 2021.
“So, claims that HDB profits from the development and sale of HDB flats are false,” said Mr Lee. “HDB will continue to ensure that public housing remains affordable and accessible for all Singaporeans.”
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Featured image adapted from MCI Singapore on YouTube and SRX.
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