International Business & Economy Proof that HDB flats were “subsidised”?

Proof that HDB flats were “subsidised”?

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By: Leong Sze Hian
I refer to the article “Why HDB flat owners are in no hurry to sell” (Straits Times, Mar 12).
My favourite insider ES sent me two very interesting media reports which may give us a better perspective on HDB pricing policies in the 1980s.
Rush to buy flats as building costs rise?
According to the article “8,950 HDB flats sold out in rush to beat price increase” (Straits Times, Jun 15, 1980) – “Last year, building costs of a three-room flat rose by 34 per cent from $17,750 to $23,800.
Total costs covering land and financing costs, added up to $32,800.
“Real” 44% subsidy on 3-room flats? 
But the board sold the flat for only $18,200 because the government gave  a subsidy of 44 per cent or $14,600 to each flat.
A four-room flat is subsidised by the government by 33 per cent and a five-room by 27 per cent.”
Transparency in HDB prices?
You can see from the above that the pricing of HDB flats was more transparent in the 1980s – where one could see the costs and the subsidies.
Now, there is less transparency as the total costs of flats are not known, and the so called “subsidy” may actually be a “market subsidy pricing” – i.e. a discount relative to  resale prices.
So, in the early years of the HDB – it was arguably, a “real” subsidy compared to now.
In this connection, according to the article “Prices of HDB flats up 20 pc” (Straits Times, Jun 24, 1980) – “Last year, the board’s building costs for public housing went up by over 30 per cent due largely to increases in the prices of building materials , arising from the oil crisis”.
HDB deficits?
Perhaps thanks to ES – we now know the real meaning of HDB pricing, costs and deficits (profits?).

Republished from Leong Sze Hian’s blog.

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