HDB suffers S$2b deficit - and its terrible

Date: Mon, 2 Nov 2009 18:49:50 -0800 (PST)
Local: Tues, Nov 3 2009 10:49 am
Subject: HDB suffers S$2b deficit - and its terrible!

The Housing and Development Board (HDB) has reported a S$2 billion
deficit before government grants in its latest annual report. The
figure is more than double the loss reported in the previous financial
year.

HDB said the huge deficit for the financial year ending March was due
mainly to more flats being sold. These flats are highly subsidised by
the government.

Higher construction costs also led to the large deficit. Other reasons
that contributed to HDB's loss included upgrading works for lifts and
rental flats.

Between April last year and March this year, HDB pushed out 8,000
flats under its Build-To-Order Scheme. That was 2,000 more than what
it supplied the year before.

At a media briefing on its latest annual report, HDB also gave an
update on the Lease Buyback Scheme which allows low-income elderly
Singaporeans to get a portion of cash upfront while HDB buys back the
tail-end of the lease of their flat.

HDB has received more than 400 applications since the scheme was
launched earlier this year. Some 25,000 households are eligible for
the scheme, but the elderly have other options to monetise their
flats.

HDB's CEO, Tay Kim Poh, said: "Some of them will sublet their entire
flat, and the rental for even a three-room flat is very good nowadays.
They can easily get S$1,500 per month from the rental and they (then)
move in to stay with their children."

Despite the global downturn, HDB said the mortgage arrears rate has
dropped 0.4 percentage point to 7.5 per cent.

Market watchers said this may be due to the high resale prices of HDB
flats.

Eugene Lim, associate director of ERA Asia Pacific, said: "There was
an upswing in the market since the beginning of this year. And what
happens is that those households in arrears probably made use of this
opportunity to sell their flat and downgrade to a flat that they can
afford."

Moving forward, HDB said it will focus on improving community
relations. A new department has been set up within the housing board
to look at strengthening social cohesion and integrating newcomers.

Where is the accountability and who is going to cover the bills!?