HDB details its costs and pricing approach for BTO flats

BTO units priced much lower than comparable resale flats: HDB

- Michelle Ng

Build-To-Order BTO) flats are priced such that they remain affordable for buyers an approach that is fundamentally different” from that of private developers, who price their residential units for profit, said the Housing Board on Wednesday.

In a statement, HDB added that as BTO flats are highly subsidised, their selling prices cannot cover development costs, which include construction and land costs.

In the 2021-2022 financial year, the total development costs for the 13,506 new flats HDB handed over to buyers came to 5.346 billion.

Revealing the breakdown of development costs, HDB said the bulk 3.167 billion went to land costs, while 2.077 billion went into building costs. The remaining 102 million was incurred when HDB acquired flats from former owners.

This means it cost HDB on average 396,000 to develop each of the new flats handed over to buyers in that year, with an estimated 365,700 collected in sales proceeds per unit. The proceeds after including housing grants amount to 347,000. The figures do not account for flat attributes such as flat types and locations.

HDB’s statement comes after the issue of affordability and pricing of BTO flats was raised multiple times in recent months, including in Parliament.

In November, Leader of the Opposition Pritam Singh had pressed Second Minister for Finance and National Development Indranee Rajah for details of the development costs of BTO flats and subsidies provided to buyers, with the minister saying it was not meaningful to provide such information, as what mattered was whether people could afford a flat.

Following that exchange, netizens had called for HDB to be more transparent about the way it prices new flats.

On Wednesday, HDB detailed how it prices BTO flats and contrasted its approach with that of private residential developers, which it said price for profit.