In the Financial Year (FY) 2021, HDB incurred a record net deficit of $4.367 billion before government grant. This deficit is 86% higher than the $2.346 billion deficit incurred in FY2020, and is the highest ever deficit recorded since the inception of public housing in Singapore. Of the $4.367 billion deficit, $3.85 billion was incurred for the Home Ownership segment ^[1]in FY2021, almost double the $1.953 billion deficit recorded in FY2020.

2 Minister for National Development Mr Desmond Lee said, “We are committed to keeping public housing affordable and accessible, to meet the housing aspirations of Singaporeans, and to help Singaporeans own their home. This is a key national priority, and provides the basic foundation for us to raise our families, bring up our children, and build strong communities. That is why we continue to build and sell new HDB flats at prices below the market, increasing our market subsidies over this period to keep BTO prices relatively stable, and also provide housing grants to eligible buyers of both new and resale flats. HDB’s substantial deficit under its Home Ownership Programme shows in real terms, our commitment to ensuring that public housing remains affordable, accessible, and inclusive.”

3 The $3.85 billion deficit stems mainly from the expected loss for flats that are currently under development, gross loss on the sale of flats and disbursement of CPF housing grants:

Expected loss for flats currently under development

Net increase of $2.262 billion in the provision for foreseeable loss for flats currently under development. This was mainly due to the following:

(a) The commencement of more new development projects and the accompanying subsidies and housing grants provided for these projects.

(b) Assistance measures for our contractors to help ease their financial pressure during the pandemic, such as co-sharing of prolongation costs arising from project delays. This helped to alleviate the contractors’ non-manpower operating expenses such as the rental of equipment, site maintenance costs, extension of project insurance premiums, and the rental of offsite storage.

(c) Measures to address the disruption in supply of building materials brought about by border restrictions around the world during the pandemic. This included tapping on the capabilities of local precast factories and securing alternative sites to produce some of the precast components. These measures have enabled HDB to continue to deliver homes to flat buyers amid severe disruptions to the construction industry caused by the pandemic.

Gross loss on the sale of flats

Higher gross loss of $659 million for sales completed (i.e. keys issued to buyers) in FY 2021, as compared with the $356 million in FY 2020, i.e. an increase of 85%.

This was mainly due to the higher number of sales completed in FY 2021 (13,506 units) than in FY 2020 (8,124 units).

Disbursement of CPF housing grants

$849 million of CPF housing grants was disbursed to eligible buyers of resale flats and Executive Condominiums (ECs) in FY 2021 as compared with $791 million in FY 2020.

4 Separately, HDB incurred a deficit of $121 million from the rental of HDB flats to eligible tenants under the various rental housing schemes. $3.6 million was also written off for rental arrears confirmed irrecoverable in FY2021.

Supporting homeowners and heartland businesses through challenging times

5 During the FY, HDB also provided financial assistance to homeowners and shop tenants to help tide them through the challenging year.

Help for homeowners	To better support homeowners in need, HDB offered financial assistance for those in mortgage and upgrading cost arrears, such as suspension of late payment charges, which amounted to $15 million.
Help for commercial tenants	HDB provided support for 8,500 qualifying tenants in HDB shops and social-communal facilities, by waiving rentals amounting to $115 million.

Rejuvenating towns and flats

6 HDB constantly rejuvenates its towns and flats to provide residents with a better living environment and amenities, as well as to bring the physical environment of older estates closer to those of newer towns. This is carried out through our suite of rejuvenation and upgrading programmes which are heavily subsidised or fully funded by the Government.

7 In FY 2021, HDB incurred a deficit of $392 million for its upgrading programmes, an increase of more than 60% compared with the $242 million deficit incurred in FY 2020. The increase in deficit was the result of the higher expenditure on the Home Improvement Programme (HIP), due to the pick-up of works in FY 2021 as construction activities progressively recovered with the gradual easing of the pandemic measures.

Home Improvement Programme (HIP)	In FY 2021, 53,792 flats were upgraded under HIP, which helps residents address common maintenance issues related to ageing flats.
Neighbourhood Renewal Programme (NRP)	6 NRP projects were announced and another 6 NRP projects were completed. This brings the total number of completed projects to 100 since the introduction of NRP.
Lift Upgrading Programme (LUP)	LUP was completed for 3 blocks, bringing direct lift access to 136 households. Works for the remaining 6 blocks are on track.

8 HDB also recorded an increased deficit of $352 million for residential ancillary functions in FY 2021, including the provision and management of facilities such as car parks in housing estates, and planning and building administration, as compared with $307 million in FY 2020. The increase was due mainly to higher expenditure on car park improvement and cyclical works such as re-construction of drains, and repair and replacement of mechanical and electrical works.

Keeping public housing affordable and accessible

9 HDB will continue to provide public housing that is affordable and accessible for Singaporeans. In pricing new flats, the key consideration is to ensure affordability for flat buyers, especially first-timers. While construction costs have gone up by about 30% since FY2019, these construction costs have been largely absorbed by HDB, with larger subsidies given out for our housing programme and CPF housing grants to keep new flats affordable, as can be seen from the widening deficits incurred by HDB over the past two years. Most first-timer buyers therefore use less than a quarter of their monthly income to service their housing loans, and close to 90% of first-timer families service their HDB loans using CPF with little or no cash payments.

10 To meet the strong housing demand, HDB has been ramping up the supply of BTO flats and will launch up to 23,000 flats per year in 2022 and 2023. This is a significant increase of 35% from the 17,000 flats launched in 2021. This means that not only will more buyers be able to secure their BTO flats, and in a wider range of locations, they will also be able to select from a larger pool of flats that meet their budgets. We are also prepared to launch up to 100,000 flats in total from 2021 to 2025, if needed.

*Note: Figures are rounded off to the nearest million and percentages are rounded off to the nearest whole number

^[1] The Home Ownership segment covers the development and sale of flats to eligible buyers under the various home ownership schemes for public housing, and disbursement of housing grants to eligible households of new and resale flats.

Record Deficit of $4.367 billion Incurred by HDB in FY 2021