Since Boon Wan’s revelation that HDB was losing money for every flat it sold and the amount was a scandalous billion dollar annually, he has been questioned and ridiculed by many bloggers who simply could not believe in what he said. Some of the attacks were quite personal and very unpleasant. What is more worrisome are the losses incurred by HDB now and later on.
According to Boon Wan, the annual losses over the last few years were about a billion, ie every year but no sure how many years he was referring to, no matter how many flats were built. The building programme was ramped up only last year after he came into office. The number of flats built was very small during the watch of his predecessor that led to the current housing problem and high property prices. So, how much is HDB losing for every flat that it sold? And how much will HDB be losing if the population increases to 6.9m? At 6.9, HDB will need to build another 400,000 units to house the increase of 1.6m people at 4 person per flat.
Let me hazard a guess. Taking a best case scenario to do a rough calculation, the building of 50,000 units under Boon Wan, and using his annual $1b loss, HDB should incur a loss of $20,000 for every unit sold. Tiok boh? If $1b is the loss when only 10,000 units were sold, then the loss per unit should be $100,000.
To build another 400,000 units, the loss could be in the region of $80b to $400b depending on which number one is using. This is a serious amount to lose and a big sum to save if the population is not increased and there is no need to build the 400,000 units of flats. Would it be prudent and make more economic sense not to increase the population to incur more losses? But this is not all. Boon Wan is trying to bring down the prices of HDB flats from an average of 5.5 years of the buyers annual income to 4 years. This would definitely add to the losses that HDB would have to incur. I am terribly worried as to where the Govt is going to find the money to subsidise these losses. Yes, this is a lot of money and it must come from somewhere and someone would have to pay for it.
Maybe Boon Wan has already worked out the sums and the public need not have to worry. The flats will be cheaper and the losses would be taken care of, somehow.
Chua Chin Leng aka redbean
* Article first appeared on http://mysingaporenews.blogspot.com/