http://www.businesstimes.com.sg/real...-supply-tapers

HDB deficit before grants shrinks 19% to S$1.6b as new supply tapers

Flats, including those under the design, build and sell scheme, completed during the financial year fall 19.9% to 24,163 units

By Kenneth Lim

[email protected]

@KennethLimBT

Oct 14, 2016


THE Housing Development Board's (HDB) net deficit before government grants shrank by about 19 per cent in fiscal 2016 to S$1.6 billion as the public housing agency continued to reduce the pace of new builds.

For the year ended March 31, 2016, the net deficit incurred by housing activities narrowed by 16 per cent to S$2.3 billion. Other activities, which include commercial rentals and agency businesses, posted a surplus of S$0.6 billion, 10 per cent lower year on year.

HDB sells flats to Singaporeans at subsidised rates, and therefore tends to incur a higher deficit if more flats are put on the market.

The deficit from the home ownership segment shrank 33 per cent to S$1.2 billion during the year as HDB continued to reduce the supply of new flats, a policy that has been in place since 2014 amid signs of a stabilising public housing market.

During FY16, HDB launched three build-to-order sales exercises that offered more than 15,000 flats across 19 projects; this was less than the 19,800 flats offered the year before.

HDB also built 2,206 rental units, bringing the total stock of rental flats to 55,131 units as at end-March. The agency has committed to raising the total rental housing stock to about 60,000 units by 2017.

Bookings for new flats increased by 1.6 per cent to 22,432 units in FY16, while applications for resale flats rose 11 per cent to 19,620 units.

On the supply side, residential units, including those under the design, build and sell scheme (DBSS), that were completed during the financial year decreased by 19.9 per cent to 24,163 units. Residential units under construction, including DBSS, slipped 5.4 per cent to 86,307 units.

ERA Realty Network key executive officer Eugene Lim said that HDB's calibrated measures over the past few years have brought some stability to the public housing market, giving potential resale flat buyers the confidence to put money down.

Policies such as the Proximity Housing Grant, which was introduced during fiscal 2016 to encourage families to live closer to one another, have also increased demand from first-time homeowners unwilling to wait the typical two to three years for build-to-order flats to be completed. The grant awards S$20,000 to Singaporean families who buy a resale flat in the same town or estate, or within two kilometres of the homes of parents or married children. Eligible singles can receive a S$10,000 grant if they buy a resale flat with their parents.

"The resale market has improved in terms of transaction volumes. Things are a lot more busy for my agents doing HDB resale," Mr Lim said.

Lee Nai Jia, Edmund Tie & Co head of South-east Asia research, said that resale prices on the whole are stable, although the more centrally located units continue to perform better than those further away from the central region.

"We're now entering a period of stability, it's really a new equilibrium state," Dr Lee said.

However, he reckoned that the public housing market is unlikely to have much impact on private residential prices at this time because the investment motivation for resale flat buyers at the moment has mitigated.

"Now we're seeing those buying in public really buying for needs and wants; private is for those with excess cash, who want to buy for investment," Dr Lee said.