HDB builds more flats, records higher net deficit

More Housing and Development Board (HDB) flats were being built in the last financial year compared to the previous year.

This is according to HDB's annual report released on Wednesday.

A total of 72,737 flats were being constructed in the last financial year (FY2012/ 2013), up from 56,938 units in the year before (FY2011/2012) -- a close to 30 per cent jump.

HDB's net deficit before taking into account the government grant in the last financial year, also increased close to 80 per cent.



The net deficit incurred was S$797 million, compared to S$443 million the year before.

HDB said the higher deficit is due mainly to higher deficit for the Home Ownership segment, which comprises mainly the loss on the sale of flats, disbursement of CPF housing grants and the net provision for foreseeable loss for flats under development.

HDB's ramped up building programme has been put into action in the last few years.

HDB's chief executive officer, Dr Cheong Koon Hean, said the ramped up supply has helped meet the needs of various groups of home buyers, and also gone some way to rebalance the supply and demand situation.

But she added the challenge ahead is to ensure the delivery of new flats, given the large volume and resources involved.

Meanwhile, Associate Professor Sing Tien Foo, from the National University of Singapore’s Department of Real Estate, said one of the main reasons for the increase in HDB’s net deficit is the increase in supply of flats during the last two years.

"One of the main reasons is the increase in supply for the last two years. All these will actually be added to the costs. Both cost of construction, land costs, and also the housing grant given to the home owners,” Associate Professor Sing said.

HDB also launched more than 27,000 flats under the Build-To-Order (BTO) system in 2012 -- the largest supply in a year since the BTO system was introduced.

However, the number of flats sold, or the number of keys issued to buyers, in the last financial year, dipped to 10,533 units.

This is about 2,000 units fewer than the previous year.

Associate Professor Sing said: "Normally it takes about three to four years to complete the project. It will take longer for larger-scale projects.

“The bulk of the supply that we've seen in the last two years, will actually only come…into the market, over the next two to three years."

HDB also said given the ramped up supply and pressure put on the building industry, it must also ensure the timely delivery of flats without compromises on quality.