TOC: Mah’s explanation does not square with HDB’s annual report

Mah’s explanation does not square with HDB’s annual report

Friday, 20 November 2009, 3:03 pm | 1,401 views

Leong Sze Hian

Number of flats sold declined, contradicting Mah’s explanation on reasons for HDB’s S$2 billion deficit.

On 7 November, the Minister for National Development, Mr Mah Bow Tan, explained why the Housing and Development Board has incurred a S$2 billion loss this year. The loss is twice that of the previous year. According to Channelnewasia, Mr Mah said:

“It is making a loss and the government gives it grants every year to cover the losses, mainly because we’re giving subsidies to people to buy flats to make flats affordable to first timers. That is why we’re making a loss.”

The report went on:

“Mr Mah said the HBD makes a loss each time it gives out subsidies to first-timer home buyers, and when it sells flats lower than their cost price. The reason for the high deficit was because more flats were offered for sale last year, compared to the year before”.

Mr Mah’s remarks seem to contradict the statistics provided in the HDB’s latest annual report.

According to the annual report, HDB revealed that “the number of flats sold under the home ownership scheme this year was 4,738, which was 7,253 less than last year”.

According to its section titled “Key statistics”, the “demand for flats” was 9,870 Home Ownership flats for 2008/2009, compared to 12,449 for 2007/2008; and the “Building statistics – Dwelling units” was 3,154 in 2008 compared to 5,063 in 2007.

All these numbers show that the number of flats sold have declined, rather than increased.

The number of flats sold under the home ownership scheme declined by 60 per cent, “Demand for flats” declined by 21 per cent, and “Building statistics – Dwelling units” declined by 38 per cent, for the last year.

So, how is it possible then that “the reason for the high deficit ($2 billion) was because more flats were offered for sale last year, compared to the year before”, when the HDB statistics show that flats’ building, demand and sales, all declined substantially last year compared to the year before?

Can the Minister clarify his statement on the reasons for the doubling of the deficit from $1 billion to $2 billion for the last year?

As for Mr Mah’s assurance that HDB “sells flats lower than their cost price”, the HDB has not disclosed the breakdown of the cost of building flats, despite letters to newspaper forums requesting for this information, almost every year.

The last time this information was disclosed was in 1981, when the then National Development Minister Mr Teh Cheang Wan, disclosed the land and construction cost, as well as the subsidy and selling price, of the various flat types in six districts.

For example, a three-room flat in the central core region, cost $53,700 to construct and incurred a land cost of $40,000, and sold for $57,100.

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Picture from Straits Times.

Parliament will sit at 1.30 pm on Monday, 23 November. The following are some of the questions tabled for the Ministry of National Development:

Mr Chiam See Tong: To ask the Minister for National Development (a) what it costs the government to build a 3-room, 4-room and 5-room HDB flat; (b) what is the profit margin which HDB adds to the cost for each of these categories of flats when it sells them to the public; and (c) whether HDB bases the selling price of flats on the prevailing market price of these flats.

Er Lee Bee Wah: To ask the Minister for National Development (a) how many new Build-To-Order flats are presently available for selection; and (b) how do the supply and demand factors influence the cost of these flats.

Mdm Cynthia Phua: To ask the Minister for National Development (a) what is the projected supply and demand of HDB flats in the next 5 years; (b) what are the parameters that are taken into account in the projection of the supply and demand of flats; (c) whether the Ministry has considered an annual buffer number of ready flats and, if so, what is the number and the parameters in arriving at that number; and (d) what measures will the Ministry consider in ensuring that first-timers get a new HDB flat within 3 years.

Dr Muhammad Faishal Ibrahim: To ask the Minister for National Development what is the current waiting time and the number/percentage of couples applying for new HDB flats under the Fiance/Fiancee Scheme.

Dr Lim Wee Kiak: To ask the Minister for National Development (a) what is the total number of permanent residents (PRs) who own HDB flats and the distribution pattern of PRs in the various public housing estates; (b) whether his Ministry will ensure that there is a good mix of PRs in the various housing estates to encourage better integration with Singaporeans; and (c) whether his Ministry will consider expanding the current policy on racial mix for HDB flats to include PRs.

Mr Lim Biow Chuan: To ask the Minister for National Development (a) how many HDB tenants have been evicted from HDB rental flats for the past 12 months due to illegal sub-letting or inability to pay rental; and (b) what are HDB’s plans to provide alternative housing for such evicted tenants if they are unable to find alternative accommodation.

Mr Lim Biow Chuan: To ask the Minister for National Development whether his Ministry will review the household income ceiling for rental flats to take into account inflation and the increased cost of living, before pegging rental rates at 30% or 50% of the market rate.