Upgrading older homes and completing new flats contributed to a significant rise in the Housing Board’s annual deficit for FY2022.
Housing Board Faces Record Deficit in FY2022
The Housing and Development Board (HDB) of Singapore has announced a record $5.38 billion deficit for the financial year 2022, which spans from April 2022 to March 2023. This deficit marks a 23% increase compared to the $4.367 billion deficit recorded the previous year. Key factors contributing to this rise include the completion of 23,782 new flats, the upgrading of aging homes, and the increase in keys issued to buyers—a total of 21,259 keys, up 42% from the previous year.
Breakdown of the Deficit
The majority of the deficit, approximately $4.68 billion, is linked to the cost of new flat development, the disbursement of Central Provident Fund (CPF) housing grants, and losses on subsidized flat sales under the Home Ownership Programme. These losses were 22% higher than those incurred in the prior year. Specifically, $2.712 billion of the deficit stems from flat construction costs, with $1.2 billion attributed to the gross loss on subsidized flat sales—nearly double the loss from the previous year.
Rising Construction Costs and Housing Grants
HDB’s chief executive, Tan Meng Dui, explained that supply chain issues, material cost increases, and a labour shortage have contributed to a 40% rise in construction costs since FY2019. Despite these challenges, the government has increased subsidies and housing grants to maintain affordability for buyers.
In FY2022, HDB’s resale transactions dropped, leading to a decrease in CPF housing grants disbursed to buyers of HDB resale flats and executive condominiums, which totaled $686 million, down from $849 million the previous year. The number of resale transactions also fell to 27,900 from 30,400 in the prior year.
Investment in Home Upgrades and Public Housing
HDB spent $558 million on upgrading programs, a 40% increase from the previous year. These funds were directed towards the Home Improvement Programme (HIP) to remedy common maintenance issues in aging flats. In FY2022, 33,704 flats were upgraded under this program, improving the living conditions for homeowners, with over half opting for elder-friendly modifications. Additionally, $432 million was allocated for various works, including electrical infrastructure upgrades and maintenance of public housing facilities.
Government Support and Future Plans
To cover the $5.38 billion deficit, HDB received a grant of $5.389 billion from the Ministry of Finance, an increase from the previous year’s grant of $4.4 billion. Since its inception in 1960, HDB has received a total of $48.36 billion in government grants.
National Development Minister Desmond Lee emphasized that increased government spending is essential to maintaining affordable and accessible public housing for Singaporeans. The government has also introduced a new framework, the Standard, Plus, Prime system, to ensure that flats in prime locations remain affordable and equitable.
Looking ahead, HDB plans to launch up to 23,000 flats in 2023, part of its commitment to deliver 100,000 flats between 2021 and 2025, ensuring that demand for public housing continues to be met.
Key Takeaways:
$5.38 billion deficit recorded for FY2022.
Significant increase in the completion of new flats and the upgrading of older homes.
Government grants are supporting HDB’s financial deficit to keep housing affordable.
HDB’s upcoming launch of up to 100,000 flats by 2025 to meet housing demand.
