• How does HDB determine the prices of new flats? Are the flats priced to recover land and building costs?

    HDB, like any developer, incurs land and construction costs when it develops HDB flats.

    HDB’s total development cost, which includes construction and land costs, cannot be fully covered by the sale prices of its flats. This is why HDB incurs a significant deficit every year for its Home Ownership Programme. The annual deficits, funded by Government grants, are reflected in HDB's audited financial statements, which are published annually.

    HDB does not price flats to recover costs.

    In pricing new flats, the key consideration is to ensure affordability for flat buyers, especially for first-timers. HDB first establishes the market value of the flat by considering the prices of comparable resale flats nearby, as well as the individual attributes of the flat (such as its location, floor area, storey height, orientation and accessibility to facilities, key transport nodes and amenities), and the prevailing market conditions. A significant subsidy is then applied to this assessed market value, so that new flats are priced below market.

     Q: Is it fair to compare the price trends for BTO flat prices with average town-level resale prices?

    A: BTO flats are priced to reflect their individual attributes and take into account comparable resale flats nearby. It is not accurate to compare BTO flat prices to average resale prices for the entire town, as the resale flats are scattered across the town with some located near the town centre and/or other facilities while the others further away. Learn more about why BTO flats in the same town may have different prices.

    So, how does HDB keep new flats affordable? 

    The Government is committed to helping Singaporeans own their first home. On top of pricing new flats at a significant discount to market, HDB introduced and enhanced various housing grants over the years to ensure that flats remain affordable and accessible to Singaporeans.  The Enhanced CPF Housing Grant (EHG) was introduced in September 2019 to provide Singaporeans with more affordable housing options.

    With the EHG, eligible first-timer families buying new flats can now enjoy up to $80,000 in housing grants regardless of their choice of flat type or location.  The EHG amount is calibrated according to the household income to provide more help to lower-income families.

    For example, a first-timer couple with a monthly household income of $5,200 can receive an EHG of $40,000 to support their BTO flat purchase.

    Another first-timer couple with a household income of $2,600 can receive a higher EHG of $65,000.

    These grants and housing subsidies help to keep flats affordable for first-timers:

    • Most first-time flat buyers purchasing a new flat use less than a quarter of their monthly income to pay for their loan instalments. This is below the international affordability benchmarks of 30-35%.

    • Close to 90% of first-time buyers* can service their HDB housing loan using CPF savings alone, with no monthly cash payments. Buyers can also choose to use less CPF and more cash, if they plan to set aside more of their CPF savings for retirement.
      * Based on transactions completed from Jan to Apr 2022