Housing Development Board Did HDB make a profit on selling the BTO flats in Ang Mo Kio?
Does HDB make a big profit on selling the BTO flats in Ang Mo Kio at a high price?

The minister for national development said that HDB did not make a profit, after factoring in the cost of land and construction. The deficit is larger when the govt grant is taken into consideration. 

From a narrow perspective, the minister is probably right. The books of HDB would probably show a deficit. 

However, the buyers have to pay a price that is much higher than similar size HDB flats sold in past decades. 

A large component of the increased price is probably due to the cost of land. The HDB has to buy land from the govt at the market price, which has recently sharply in recent years. 

The increase in land price is probably due to high demand and insufficient supply. It is well known that the govt controls most of the available land in Singapore. They are probably responsible for increasing the price of land by restricting the supply. 

In this respect, they are probably behaving like a greedy capitalist in maximizing their profit, in this case, from the sale of land through its monopoly power. 

If the govt wishes to bring down the price of land, they could increase the supply to an extent that the price stops rising. The ability of the govt to increase the supply is probably higher than the ability of the developers to buy the land. 

When buyers complain that the govt is making a large profit on selling the HDB flats, they are probably justified in expressing this opinion. The profit did not accrue to HDB, but instead to the govt through the land sale revenue. 

The minister should not apply his power to issue the POFMA on the website that alleges that HDB was making a profit. While technically, HDB did not make the profit, the govt did, and that was done through the proceeds of the land sale. We must not argue over technical details, when it is the spirit that counts. 

Anyway, I do not want to waste time arguing over semantics and other rubbish.

Tan Kin Lian

 

Add Comment

---