Debated in Parliament on 7 Nov 2022.
Mr Leong Mun Wai asked the Minister for National Development in each year from 2012 to 2022, for HDB BTOs in (i) prime areas (ii) mature estates and (iii) non-mature estates respectively (a) what is the average selling price per square foot sold by HDB to the public; (b) what is the average land cost per square foot paid by HDB to SLA; (c) what is the average subsidy per square foot offered by HDB to the public; and (d) why does the amount of subsidy offered for each BTO flat vary across BTO projects and flat types.
In pricing Build-To-Order (BTO) flats, HDB’s key consideration is to ensure affordability for flat buyers, especially first-timers. HDB first establishes the market value of the flat by considering the prevailing market conditions, prices of comparable resale flats nearby and the individual attributes of the flat, such as its location, floor area, storey height, orientation and accessibility to facilities, key transport nodes and amenities. A significant subsidy is then applied to ensure that new flats are affordable to those buying their first home. The prices of new BTO flats are substantially lower than comparable resale flats, and pricing information is published at every BTO launch. The amount of subsidy applied varies across launches, depending on the prevailing market conditions, location and attributes of the flats offered. As such, it is not meaningful to compare it across years.
In the past two years, even as construction costs increased by about 30%, we have managed to keep BTO flat prices relatively stable by increasing the subsidy applied. The average selling prices per square foot for BTO flats in 2012 and the first three quarters of 2022 are in Table 1 below.
On top of the subsidy applied, HDB provides further housing grants to help specific demographic groups achieve their home ownership aspirations. These include the Enhanced CPF Housing Grant, Proximity Housing Grant and Step-Up CPF Housing Grant, and are not accounted for in the selling prices reflected in Table 1. Over the same period, the median resident employed household income grew by 26%, and housing grants had also been increased several times.
Altogether, the effective price of a new HDB flat for first-timer buyers is, generally, four to five times that of their annual household income. The mortgage servicing ratio (MSR) also falls below 25% for most new and resale first-timer flat buyers who take on an HDB loan, which means that most flat buyers can service their housing loans using their monthly CPF contributions, with little or no cash outlay.
On land costs, HDB pays fair market value for the land that is purchased to develop HDB flats, which is determined independently by the Chief Valuer. Proceeds from HDB’s land purchase are paid back into the Past Reserves, which are, in turn, invested to generate returns for future generations of Singaporeans.
The total land costs that HDB paid to SLA in FY2012 and FY2021 are in Table 2 below.
Apart from land costs, HDB also incurs construction costs to build HDB flats. The total development cost, which includes construction and land costs, cannot be fully covered by the selling prices of flats. HDB thus incurs a significant deficit each year for the Home Ownership segment, and the deficit incurred in FY2021 ($3.85 billion) was almost double that of the previous year.
We remain committed to keeping public housing affordable and accessible to Singaporeans and to help Singaporeans own their first home.
PAPERCUTS