HDB FLATS

Column: 471

HDB FLATS

8.

Mr Steve Chia Kiah Hong asked the Minister for National Development, after factoring in all the costings, like land cost, construction cost per unit of about S$50,000 and other construction-related costs, costs for piling works, consultancy and project management fees, marketing cost, etc, and the discounted price given to first-time home buyers in the name of €˜market subsidy', what is the actual profit amount and profit margin that HDB will make on each HDB flat.

Mr Mah Bow Tan: HDB flats are priced at a market subsidy, ie, below their equivalent market prices. Just as first-time flat buyers of HDB resale flats can take up a housing grant of $30,000 or $40,000 and enjoy a discount off the market price of the flat, those who buy new flats from HDB also enjoy a discount off the equivalent market price of the flat. This difference between what a buyer pays HDB for his flat and what it is actually worth in the market is the subsidy provided by HDB to him. The provision of such a market-related subsidy has enabled HDB to keep its flats affordable for Singaporeans.

The development costs of flats vary from time to time and contract to contract, due to the particular site conditions, design or location of each project, as well as market and material price fluctuations. While we do not track the cost subsidy for each HDB flat, the overall deficit incurred by HDB for its home ownership activity is reflected in its annual accounts. Over the lastfive years, this deficit has averaged about $530 million per year.