HDB deficit more than doubles

By Janice Heng, The Straits Times, 18 Dec 2014

- $1.97b overall net deficit

- $1.93b home ownership deficit

- More flats under construction

THE Housing Board's deficit more than doubled in the last financial year, as building continued on the record number of new flats launched since 2011.

In the year ended March 31, it incurred a $1.93 billion deficit on home ownership alone, according to its annual report yesterday.



The Special CPF Housing Grant's take-up rate also spiked, after the scheme for first-time buyers was enhanced to make more households eligible in July last year, the HDB said in a separate statement.

Last year's home ownership deficit was 2.7 times that of the previous financial year.

This was mainly because the HDB had more projects on the go, after three years of large Build-to-Order (BTO) launches. There were 86,298 flats under construction, up from 72,737 in the previous financial year.

The HDB thus had to make a larger provision for foreseeable loss under its operating expenses.

This is the difference between the estimated development cost and the selling price of flats. It accounted for most of the home ownership deficit last year.

The HDB's overall net deficit before government grants and taxation was $1.97 billion, up from $797 million the year before.

Mr Liang Eng Hwa, deputy chairman of the Government Parliamentary Committee for National Development, does not see the deficit as cause for worry as long as spending remains sustainable.

"To me, it's essentially social spending," he said. "In public housing, you need to have subsidies."

From 2011 to last year, the HDB launched 77,000 new flats, clearing the backlog of first-timer demand and reducing competition among applicants.

Having achieved that, it began slowing down supply this year.

Yesterday, the HDB also gave updates on policy changes introduced in the last financial year.

One change with huge effects was the July 2013 enhancement of the Special CPF Housing Grant that was first introduced in March 2011.

The income ceiling was raised and the grant was extended to four-room flats, making more middle-income households eligible.

As of the end of October, the grant had benefited about 10,500 households - more than 8,700 of whom took it up after the change.

There were also measures to cater to various groups of buyers.

Singles were allowed to buy new two-room flats from July last year. As of the end of October this year, 3,700 had booked units.

Large three-generation flats for multi-generation families were introduced in the September 2013 BTO. More than 500 have been launched and, as of October, 340 have been booked.

HDB to focus on helping families live close together
Needs of singles and low-income families also priorities for 2015: Khaw
By Janice Heng, The Straits Times, 30 Dec 2014

AS THE backlog of first-timer demand for new Housing Board flats has been cleared, next year's focus will be on helping families to live close together, as well as singles and low-income families who cannot yet afford a flat.

But there will be limits, National Development Minister Khaw Boon Wan cautioned yesterday as he set out his priorities for 2015.

"Everybody who wants to stay near their parents, and parents who want to stay near their children... I'll do my very best to meet their wishes," he said.

Still, it will not be possible all the time, particularly in mature estates as there is not enough land.

Efforts have already been made to meet such demand.

Last month's Build-to-Order launch was the first in which flats were set aside for those applying to live with or near their parents or married children.

Asked what else can be done, Mr Khaw replied: "We have to be creative."

R'ST Research director Ong Kah Seng suggested higher subsidies or housing grants. What counts as "nearby" could also be relooked, with benefits available for couples who stay in the same region as their parents, and not just the same estate, he said.

Mr Khaw's other focus next year will be "groups where the needs are still not completely met". These include singles and those who are unable to own a flat and hence rent instead.

The HDB's overall pace of construction will slow next year, but not when it comes to building units for these two groups.

"If policies can be tweaked to facilitate their needs being met, I will do so," he added.

He was speaking to reporters at the handover of a block in the Waterway Woodcress project, the first to be completed along My Waterway@Punggol.

Among its earliest residents are personal driver Kayom Abdul Samad, 36, his wife, their three children, and his mother.

Getting a four-room flat there was his wife's idea, said Mr Kayom: "She really loves the master bedroom with a balcony. It's something very unusual for an HDB flat. It's condo-style."

Yesterday's ceremony marked the completion of 28,000 flats this year, up from the 13,600 that were finished in 2013. The target for next year is to complete 26,000 new flats.

In a blog post last week, Mr Khaw said the HDB would work harder to address elderly residents' wishes to age in place.

Asked yesterday about reverse mortgages, which convert part of a home's value into cash, he replied that the Government's study of it was ongoing.

"But I'm not pinning too much hope on it," he said. The take-up rate in cities where reverse mortgages are established is very low.

The HDB also gave updates on how many people have benefited from policy tweaks this year.

As of the end of last month, almost 11,000 households had taken part in the Enhancement for Active Seniors scheme, which subsidises elderly-friendly fittings.

About 1,040 of them were able to do so after the age criterion was lowered in August.

In July, the HDB also allowed resale sellers to stay in their flats for up to three more months, if the buyer agrees. This was to help sellers who needed more time for the transition. As of Nov 30, there were 847 requests for this temporary extension.

Post by Khaw Boon Wan.

'Good' if resale price slide continues
By Janice Heng, The Straits Times, 30 Dec 2014

THIS year's slow slide in public resale flat prices is what National Development Minister Khaw Boon Wan hopes to see in 2015 too.

"If what we observe this year continues into next year, I would consider that a very good development," he told reporters yesterday morning.

Asked if a double-digit fall in Housing Board resale prices is expected, he replied: "I hope not."

Drastic price falls are "seldom good" and usually due to external events such as financial crises, he said. Single-digit changes are easier for people to accept.

Experts expect HDB resale prices to have fallen by under 8 per cent for the whole of this year.

Their predictions for 2015 range from stagnation to a further drop of 5 per cent to 8 per cent for the full year.

The subdued resale market is the result of a ramped-up supply of new flats from 2011 to 2013, as well as cooling measures such as loan curbs and stamp duties.

Asked if cooling measures will be relaxed, as developers have called for, Mr Khaw replied that some of the measures are temporary and will be adjusted when the market is cool enough.

"The question is, when do you do that and how do you do that. So those are obvious issues of consideration next year."

But measures related to financial prudence are permanent and should be preserved, he added.

These include the Total Debt Servicing Ratio (TDSR) framework, which puts a 60 per cent cap on the proportion of salary that goes towards servicing debts, and restrictions on loan tenure.

"Those are parameters that (the Monetary Authority of Singapore) sets, and those parameters you can calibrate as you go along. But the framework, I think, is the right framework," said Mr Khaw.

This stance is in line with the market's expectations that the TDSR is here to stay, said R'ST Research director Ong Kah Seng.

Chris International director Chris Koh noted that, if prices keep falling, next June will mark two years of decline.

"If the total decline is substantial, it would be timely to tweak some of the measures," he said.

Related

HDB Annual Report 2013/14

Since the Government owns State land, why can’t HDB acquire land at a cheaper price, so that flat prices can be lowered?