Subsidy for HDB Flats

Ms Ellen Lee asked the Minister for National Development (a) what is the cost of building a HDB flat; (b) what is the average subsidy which an eligible citizen family can get in respect of each flat type; (c) whether the housing subsidy has changed in the past 10 years and, if so, what are the factors that caused the change; and (d) whether there is a cap on the total amount of subsidy which an eligible citizen family can receive if they purchase a second subsidised flat.

Mr Khaw Boon Wan: The cost of building HDB flats includes the cost of land, design, construction, financing and other project-related costs. It varies from project to project and year to year.

The total costs are reflected in HDB's annual financial statements. Averaging over the past three years, the Home Ownership Programme costs HDB $874 million per year.

On a project basis, the costing of Waterway Banks, a BTO project launched in November 2011 at Punggol, is illustrative. This is a project with 1,016 units of 2-room, 3-room and 4-room HDB flats. The project would cost HDB $279 million to complete. Sale proceeds would amount to $240 million; this is less than our cost. HDB would, therefore, incur a loss of $39 million on this BTO project.

In practice, each family receives a much higher subsidy than as computed based on cost. This is because BTO prices are substantially below the market prices of comparable resale units in the vicinity.

HDB reviews its housing subsidies regularly to ensure that our flats are affordable for all first-time homebuyers. In recent years, we have also given more grants to lower-income first-timer households to help them more. In 2006, we introduced the Additional CPF Housing Grant (AHG), and enhanced it in 2007 and, again, in 2009. In 2011, we introduced the Special CPF Housing Grant (SHG).

Currently, eligible first-timer households earning not more than $5,000 a month and buying a new flat or a resale flat will enjoy an AHG of up to $40,000. In addition, households earning less than $2,250 are eligible for an SHG of up to $20,000. Therefore, a lower-income family who is buying their first flat from HDB can enjoy a housing subsidy of up to $60,000. These grants are on top of the market discounts they are already getting for the flat. Ten years ago, there was no AHG or SHG.

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As for those first-timers who buy resale flats, they can enjoy housing subsidies of up to $80,000 with the CPF Housing Grant and the AHG. Ten years ago, there was only the CPF Housing Grant of up to $40,000.

Eligible second-timer households can also buy a second subsidised flat and get a second housing loan at concessionary interest rates from HDB. We have no global cap on the total market subsidies that households can get if they buy a second subsidised flat. However, the subsidies for individual households are capped by the amount of resale levy they have to pay.