Did the government spend or made $28 billion from selling HDB flats?

I refer to the article “Housing in Singapore – The high life” (The Economist, Jul 8).

Govt spent $1.8b on HDB?

It states that “It is also a good deal for the state. In 2015-16 the treasury put aside S$1.8bn, or 2.4% of the national budget, for housing, which was enough to cover HDB’s annual deficit. (The agency itself had a budget of S$17bn; it benefits from government loans but also borrows from banks and the bond market.) The government says it has paid a little over S$28bn in grants to HDB since its founding in the 1960s.”

HDB paid $4.9b for land to the Govt? 

According to the HDB’s annual report 2015/2016 – it had capital expenditure (cash outflows) of $4.9 and $5.1 billion for land and buildings.

No breakdown of HDB prices into land & construction costs?

Despite questions in Parliament and newspaper forums over the years – Singaporeans have never been given the breakdown of HDB BTO prices into land and construction costs.

Land charged at market rates?

All we know is that land is paid for (to the government (Singapore Land Authority)) at market rates.

49% of HDB price is land costs?

Since the ratio of land to construction costs as indicated above is 49 : 51 per cent – let’s for the purpose of illustration assume that about 49 per cent of the HDB BTO prices are for land (owned by the government).

Govt made or spent $1.8b?

So, “the S$1.8bn, or 2.4% of the national budget, for housing, which was enough to cover HDB’s annual deficit” – may from a cashflow perspective – actually be kind of like a profit (estimate for the purpose of illustration) in selling HDB BTO flats (if land was not charged at market rates).

Any countries charge land for public housing at market rates?

After all, are there any countries in the world that charges land for public housing at market rates?

Govt spent or made $28b?

Similarly, and conceptually – does it mean that the HDB may have made about $28 billion (estimate for the purpose of illustration) since its founding?

“Asset enhancement” has been demolished?

As to “Handouts linked to housing are one reason Singapore manages to do without a conventional tax-funded pension scheme. The theory is that almost all Singaporeans will own apartments outright by the time they finish working, in addition to having savings of their own. Those willing to downsize upon retirement—or “right-size”, as the government likes to say—do best” – this “asset enhancement” may now be demolished by the recent remarks that the value of HDB flats will decline to zero at the end of the typical 99-year lease.


Leong Sze Hian

A.S.S. Contributor

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