SINGAPORE – High construction costs and the continued increase in the supply of built-to-order (BTO) apartments have led the Housing Board to declare a record deficit of $6.775 billion for the 2023 financial year (FY) d April 2023 to March 2024.

That was about 26 percent more than the state public housing authority’s $5.38 billion deficit. recorded the previous yearaccording to its annual report published on November 7.

Most of the deficit – $6.225 billion – was attributed to expected losses for under-construction apartments, the disbursement of Central Provident Fund (CPF) housing subsidies and a gross loss on the sale of subsidized apartments in as part of its homeownership program, the HDB said in a statement. statement in its annual report.

The losses incurred under this program were 33 percent higher than the deficit of $4.68 billion recorded the previous year.

HDB chief executive officer Tan Meng Dui said the deficit recorded in the homeownership segment shows the board’s commitment to keeping public housing affordable amid rising costs.

Between April 2023 and March 2024, HDB began construction of around 22,700 BTO flats, an increase of 50 per cent from 15,100 units in the previous financial year, he added.

Based on its annual report, HDB completed 18,450 new flats in FY2023, down 22% from the previous year’s 23,782 new flats. It also issued 19,345 keys to homeowners, less than the 21,259 keys distributed the previous year.

Of the $6.225 billion deficit recorded in the homeownership segment, $3.738 billion comes from expected losses for apartments under construction.

The deficit was up from $2.712 billion in FY2022. HDB explained that this was due to the rise of BTO apartments, while construction costs remained high due to market uncertainties resulting from ongoing geopolitical conflicts.

HDB is running a deficit because the amount it collects from buyers from the sale of flats is less than the total cost of developing BTO flats and the housing subsidies paid.

It also suffered a gross loss of $1.369 billion from the sale of flats, which HDB attributed to higher construction costs, despite fewer units sold.

In fiscal 2023, 16,844 apartments were sold, down 8.8% from the 18,478 units sold in fiscal 2022. These figures exclude studios and apartments sold on short leases.

Meanwhile, CPF housing subsidies totaling $999 million were disbursed to buyers of HDB resale flats and executive condominiums between April 2023 and March 2024, up from $686 million the previous year.

HDB noted that the CPF housing subsidy for eligible first-time buyers of resale flats has increased to $30,000 from February 2023.