SINGAPORE — In a statement on Wednesday (7 Dec), the Housing Development Board said that BTO flats are highly subsidised, and their selling prices cannot fully cover development costs, which include construction and land costs.
HDB emphasised that their prices remain affordable for buyers.
According to HDB, the total development costs for 13,506 new flats in FY2021/22 came up to S$5.346 billion. It said that the bulk of the development cost, S$3.167 billion, went to land costs while S$2.077 billion went into building costs.
The remaining S$102 million is the costs incurred when HDB acquired flats from ex-owners.
That is to say, each unit of the 13,506 new flats on average, incurred S$154K of building cost and $234K of land cost.
It said that it prices the flats’ market value by considering the prices of comparable HDB resale flats nearby as well as the unit’s individual attributes and noted that all its subsidies are factored into flat prices when they are launched as BTO flats.
HDB also claimed that its pricing approach and costs are available to the public, such as publishing the construction costs of every BTO project and prices of awarded contracts on the HDB InfoWeb and government procurement portal GeBiz. However, the land costs of individual BTO projects are not revealed.
In fact, it took persistent enquiries from Non-Constituency Member of Parliament (NCMP) Leong Mun Wai to force National Development Minister Desmond Lee to reveal in Parliament that the estimated land cost for the Ang Mo Kio Central Weave BTO project was S$500 million. This is the amount HDB paid to the government for buying the land used in the project.
“Land forms part of the past reserves. Hence when HDB uses the land for development, the money that HDB will need to pay for the land must be paid back into the past reserves, which are invested and grown for future generations and are protected,” said Minister Lee.
In Wednesday’s statement, HDB said it incurred a record S$4.367 billion deficit in its latest financial year. In the past 2 months, the issue of HDB making a profit or a loss through the sale of HDB flats has been the subject of POFMA correction directions by the government.
Bishan land acquired by government at $0.30 psf
One of the POFMA notices was addressed towards a TOC article.
The government said that TOC has falsely conveyed that the government’s sale of land to HDB for the Ang Mo Kio Central Weave BTO project will lead to an increase in Singapore’s reserves.
“When HDB requires land to develop flats, the land has to be taken out of the Past Reserves. HDB has to purchase the land by paying fair market value for the land, and the money goes into the Past Reserves,” the statement said.
“If the Government arbitrarily prices the land below its fair market value, such as at the historical price that past Governments had paid to acquire the land, or at just a nominal $1, then it is not putting back fully what it has taken out from Past Reserves. This is equivalent to drawing down the Reserves…”
Indeed, historical prices of land which were acquired by past governments under the People’s Action Party (PAP) were much lower than their present fair market value. Many of these lands were acquired compulsorily from Singaporeans at a very low monetary value under the Land Acquisition Act.
Take, for example, the land at Bishan was acquired from Kwong Wai Siew Peck San Theng temple through a compulsory acquisition for 30 cents psf in 1979. The temple’s 131ha of cemetery land was forcefully acquired by the government for a paltry S$4.9 million.
This was disclosed by Mr Lim Chin Joo, who was then the lawyer acting on behalf of the temple, in a news article in 2010 (‘Land acquisition – for the sake of nation building‘, 3 Dec 2010, ST). “After due consideration, the clansmen accepted the acquisition for the sake of nation building. Bishan estate was the result. It was a decision that benefited Singapore,” said Mr Lim.
Large swathe of land acquired below $15psf in 70s and 80s
Not only the sacrifice of the temple’s land benefited Singapore, many Singaporeans also had to sacrifice their land to benefit Singapore too.
During the 70s, the PAP government acquired large swathes of land in the following areas: Geylang, Telok Blangah, Woodlands, Ang Mo Kio, Paya Lebar, Upper Changi, Ghim Moh, Bedok, Bukit Batok, Clementi, Changi Airport, Yishun and Hougang.
And in the 80s, the government acquired land at: Potong Pasir, Bishan, Tampines, Serangoon, Pasir Ris, Jurong West, Bukit Panjang, Choa Chu Kang, Punggol and Sembawang.
This information came from a booklet published by The Centre for Liveable Cities (CLC), a government agency established by the Ministry of National Development (MND) and the Ministry of Sustainability and the Environment (MSE).
In terms of compensation, the farmers and residential occupants of these areas were only paid $2.50 to $7.50 psf for their “squatter house with concrete floor” in the 70s and $7.50 to $14.63 psf during the period up till the mid-80s.
Many of the acquired lands were later used for building HDB flats before they were sold to Singaporeans. For example, HDB announced plans in 1979 to build a 460-hectare new town in the Hougang area for 120,000 people.