The Real Singapore

18 Oct 2013

HDB’s land capital expenditure?

Further to my article on the HDB’s deficit of $797 million for the last financial year, I would like to thank Lee Hock Wee for his Facebook posting – pointing out that page 34 of the HDB annual report does mention land costs.

However, the land costs of $5.29 billion indicated is part of HDB’s capital expenditure.

No breakdown of costs?

Without the breakdown in the cost of sales into construction, land and other costs, we are still unable to analyse with certainty whether profits or losses are made on our HDB flats?

In any case, we can try to speculate as follows:

Since the land costs is stated as being 60 per cent of the capital expenditure, and if we assume that the costs attributed to land in the total costs of flats is also 60 per cent – then one way of trying to do a comparative analysis, is to look at the last published breakdown of the costs in the media in 1981.

Land costs was only 20%?

In 1981, the the land component of the total costs of 5-room flats ranged from about 20 per cent (land $19,500 divided by total costs $100,100) for New Town, to 36 per cent (land $52,000 divided by total costs $145,200) for Central Core.

Now it’s 60%?

So, the land costs component has increased from as low as 20 to 60 per cent now.

Looking at the above – what do you think?

Does the HDB lose money on every flat sold?

HDB loans declining?

As to the Mortgage Financial Loans decreasing by about 15 per cent from $45.1 to $38.4 billion, in the last financial year, despite the increasing number of HDB flats with mortgages – does it mean that more flat owners are opting for HDB bank loans because of policy changes that make it harder to qualify for HDB loans as well as longer loan tenures and lower interest rates for bank loans?

No statistics?

The issue with the above trend may be that there are no available statistics for delinquency and foreclosures under bank loans.

Leong Sze Hian

*Leong is the Past President of the Society of Financial Service Professionals, an alumnus of Harvard University, has authored 4 books, quoted over 1500 times in the media , has been host of a money radio show, a daily newspaper column, Wharton Fellow, SEACeM Fellow, acting managing editor and columnist for theonlinecitizen, columnist for Malaysiakini, a Member on the CIFA International Advisory Board, executive producer of the movie Ilo Ilo (8 international awards), treasurer of Maruah, and invited to speak more than 100 times in more than 25 countries on 5 continents. He has served as Honorary Consul of Jamaica and founding advisor to the Financial Planning Associations of Brunei and Indonesia. He has 3 Masters, 2 Bachelors degrees and 13 professional qualifications.

P.S. Han Hui Hui has lost her life savings of $10,755.

If only 10,755 Singaporeans who care – donate $1 each to this brave 33 kg 21 year old.

Send your $1 vide Internet Banking, ATM or cheque to POSB savings account no. 279-12328-0 Han Hui Hui.

Please help to share this meaningful activity with your friends.

Written by Leong Sze Hian, Vivian Pan and Roy Ngerng