The Housing and Development Board (HDB) of Singapore has reported a record annual deficit of approximately S$6.78 billion (US$5.1 billion) for the financial year 2023 (FY2023). This marks a significant rise from the S$5.38 billion deficit reported in FY2022.  

The increase in the deficit underscores the financial challenges faced by HDB in balancing its mission of providing affordable public housing with escalating construction costs and an expanded flat supply.  

Home Ownership Segment Drives Deficit  

The bulk of the deficit—about S$6.23 billion—was attributed to HDB’s Home Ownership segment, which covers the development and sale of flats under Build-to-Order (BTO) schemes and the disbursement of housing grants to eligible households.  

The deficit stems from three main areas:  

1. Provision for foreseeable deficit: A net increase of about S$3.74 billion was recorded for flats currently under development. HDB makes upfront provisions for expected deficits for BTO projects, given the subsidized pricing of public housing. This provision rose significantly in FY2023 due to a ramp-up in BTO flat supply, with about 22,700 flats commencing development, a sharp increase from 15,100 flats in FY2022.  

2. Gross deficit on completed sales: HDB reported a gross deficit of S$1.37 billion for flats where keys were issued to buyers, compared to S$1.2 billion in FY2022. While fewer units were sold in FY2023 (16,844 units compared to 18,478 in FY2022), higher construction costs drove this increase.  

3. Higher housing grants: HDB disbursed S$999 million in CPF housing grants in FY2023, up 46% from S$686 million in FY2022. This spike followed a February 2023 revision to the CPF Housing Grant, increasing the amount by up to S$30,000 to improve resale flat affordability for first-time buyers.  

Rising Costs and Expanded Initiatives  

The record deficit is partly attributed to rising construction costs, fueled by global geopolitical conflicts and supply chain disruptions. These factors have impacted material costs and project timelines.  

Despite these challenges, HDB remains committed to its long-term plans to meet housing demand. Since 2021, it has launched over 82,000 flats and is on track to offer 100,000 flats by 2025.  

Investments in Upgrading and Rental Housing  

Beyond home ownership, HDB invested significantly in rejuvenating existing estates and enhancing housing options for lower-income families:  
- Upgrading programmes: HDB spent S$396 million on schemes like the Neighbourhood Renewal Programme, Home Improvement Programme, and Lift Upgrading Programme.  
- Rental housing: HDB increased its spending to S$160 million in FY2023, up from S$141 million in FY2022, for upgrading and managing rental flats for lower-income households.  

HDB also allocated S$446 million to residential ancillary functions, including the management of car parks and planning-related activities.  

Commitment to Affordability  

HDB reiterated its dedication to keeping public housing affordable and accessible. Despite rising costs, 80% of first-time homebuyers were able to service their housing loans with CPF, requiring little or no cash payments.  

HDB CEO Tan Meng Dui emphasized that "enabling Singaporeans to own their homes remains HDB’s key priority." He noted that the substantial deficit under the Home Ownership segment reflects HDB’s commitment to affordability, inclusivity, and accessibility for Singaporeans, even in a challenging economic climate.  

The record deficit highlights the financial trade-offs involved in sustaining Singapore’s public housing model, but it also reaffirms HDB’s enduring commitment to providing affordable housing for its citizens.