Media Statement on HDB's Pricing Approach and Development Costs for BTO Flats

Dec 7, 2022

Media Statement on HDB’s Pricing Approach and Development Costs for BTO Flats

We refer to media queries on how Build-To-Order (BTO) flat prices are determined, and the development costs incurred by HDB.

2     HDB prices its flats to keep public housing affordable to help Singaporeans own their homes. This is a key national priority and provides the foundation for us to raise our families, bring up our children, and build strong communities. Unlike the private sector which is profit-driven, HDB prices new flats with affordability in mind. We therefore do not apply a profit margin on costs. To determine housing affordability, we look at the buyers’ household incomes and the selling prices of the flats on offer, as elaborated below:

(a) Using resident household incomes and Mortgage Servicing Ratio (MSR) to determine affordability

• To determine affordability, HDB looks at the resident household incomes, and compares them with the range of flat types and selling prices on offer at every BTO launch, using benchmarks such as the Mortgage Servicing Ratio (MSR).[1] Our affordability benchmarks consider a range of different household incomes, both above and below the median household income level, to ensure a wide range of BTO flats for first-time homebuyers with different housing needs and budgets. HDB also offers housing grants, tiered by household incomes, to eligible first-time buyers, providing targeted help to those who need it most.

In 1H2022, 90% of flat buyers who collected keys to their new flats in non-mature estates and more than 80% of flat buyers who collected keys to their new flats in mature estates used 25% or less of their monthly income to service their HDB loan instalment payments (i.e. had an MSR of 25% or lower). This means that these flat buyers can service their HDB loans using their monthly CPF contributions, with little or no cash outlay.

[1] The MSR refers to the proportion of monthly income used to service mortgage instalment payments. International benchmarks for MSR have been at 30% to 35%.

(b) Determining selling prices of BTO flats, with subsidies varying across projects

• With many BTO projects launched every year across the island in different housing estates, new flat selling prices will not be uniform, and will have to take into account the different attributes and locational factors of the flats on offer at each BTO launch. This also ensures fairness for the different buyers as these HDB flats can be bought and sold in the resale market after the 5-year Minimum Occupation (MOP) period, and the locational and other flat attributes will be reflected in the resale prices then and any benefits will accrue to the flat owner/seller.

• Thus, in pricing new BTO flats, HDB first establishes the market value of the flats by considering the prices of comparable resale flats nearby, which is influenced by prevailing market conditions, as well as the individual attributes of the flats. HDB then applies a significant subsidy to the assessed market values to ensure that new flats are affordable for flat buyers. The difference in prices between the comparable resale flats and subsidised flats broadly reflects the market subsidies provided for the new flats, after accounting for differences in attributes, which include tenure.

Besides the varying attributes of new flats across BTO projects, market
conditions may also fluctuate between BTO launches, hence the extent of
market subsidies applied by HDB will vary across BTO projects in different
Varying the market subsidies protects homebuyers from market
fluctuations and ensures that BTO flats remain stable and affordable. So when the
resale prices move up, HDB will, in tandem, need to increase market subsidies to
keep BTO prices affordable. The market subsidies have been factored into the selling
prices of BTO flats, and flat buyers should consider the selling prices, alongside their
housing budget and personal preferences, when deciding on a flat purchase.

• We also adopt a similar approach for the Prime Location Public Housing (PLH)
projects. As new flats in prime locations naturally command higher market values,
PLH flats are priced with additional subsidies. This is on top of the market subsidies
accorded to all BTO flats, to keep PLH flats affordable to a larger group of
Singaporeans, especially first-timers. For parity with other BTO flat owners who are
not accorded these additional subsidies and to reduce windfall gains, PLH flat owners
will need to pay a fixed percentage of the higher of the resale price or valuation of
the flat to HDB, upon sale of their flats, to reduce any excessive windfall gains.

HDB and private developers’ pricing approaches are fundamentally different

3     HDB’s affordability-based flat pricing approach is fundamentally different from private developers’ cost-based pricing approach for private residential developments, which take into account provision for a profit margin.

4     In fact, HDB's flat pricing approach is totally separate and independent from the BTO projects' development costs. By increasing the subsidy applied in a rising property market, HDB has kept BTO flat prices relatively stable. This was the case even in the past two years where construction costs had increased by almost 30%. This reflects the strong Government support behind HDB’s continued mission to keep public housing affordable.

5     This practice is not something that is applied just during challenging times like the past two years of the pandemic. For example, the average selling prices per square foot for BTO flats over the span of a decade in 2012 (before grants) and the first three quarters of 2022 (before grants) are in Table 1 below.

Table 1: Average BTO selling price per square foot


Non-Mature Estates

Mature Estates







Growth (%)



6     The increase in BTO flat prices over this period has kept within the growth in resident household incomes. From 2012 to 2021, the median resident employed household income grew by 26%. The resident employed household income at the 2nd income deciles grew at a faster rate during that period, by 32%. On top of the subsidy applied, HDB provides housing grants to help targeted demographic groups achieve their home ownership aspirations, and housing grants have also increased several times over the same period.

Information on BTO projects and pricing is readily available to the public

7     The nature and type of information that HDB releases show how we ensure affordability for flat buyers. At each BTO launch, the recently transacted prices of comparable flats are shared, alongside the selling prices for each BTO project. These prices clearly show that each BTO project is priced substantially lower than comparable resale flats, due to the significant subsidies applied. The projects for the November 2022 sales exercise and the transacted prices of resale flats in the vicinity of each project can be found on the HDB InfoWEB.

8     In addition, we provide relevant price-related information for different family archetypes. At each BTO launch, we provide worked illustrations to show how homebuyers with different household incomes can afford different flat types. We also compute their equivalent to help homebuyers choose a flat that best meets their budgets and needs. This is how we ensure affordability in real terms for our HDB flat buyers, with different budgets and needs.

9     The above information is generally not made available for private residential development projects. In addition, HDB shares information on construction and development costs of our BTO projects on the following platforms which are publicly available:

First, the construction cost of every HDB BTO project is public information, as successful tenderers by contract sums are published on the HDB InfoWEB and in GeBIZ. This is not the case for residential projects by private developers.

Second, HDB publishes the cost of building flats and the revenue from the sale of flats in its Annual Report. This is similar to listed companies of private developers which release aggregate figures on costs and profits in their Annual Reports. A key difference is that HDB’s annual report captures development loss from its homeownership programme, while private developers’ annual reports mostly show profits. This reflects
our inherently different pricing principles, as HDB prices flats to ensure affordability while private developers price their flats for profit.

10     On land costs, HDB pays fair market value for land that is developed into public housing. The fair market value is determined independently by the Chief Valuer in accordance with market conditions and established valuation principles. There are differences between land used for public vis-à-vis private residential use. Land used for public housing is meant for providing affordable homes to Singaporeans, and buyers of public housing flats are subject to more restrictions than flats sold in private residential projects. It is lower compared to the land price for private housing in the same locality. This differential reflects the more stringent eligibility criteria and conditions that buyers of public housing must meet in terms of income, citizenship, minimum occupation period etc.
Proceeds from HDB’s land purchase are paid back into the Past Reserves, which are in turn invested to generate returns for future generations of Singaporeans.

11     The total development cost, which includes construction and land costs, cannot be fully covered by the selling prices of flats as the latter is highly subsidised. That is why HDB incurs significant deficits every year in its Home Ownership Programme, which are reflected in HDB’s Annual Reports found on the HDB InfoWEB.

• For instance, in the latest FY2021/22, HDB recorded a deficit of about $3,850 million in its Home Ownership Programme. HDB’s substantial Home Ownership deficit shows in real terms, our commitment to ensuring that public housing remains affordable, accessible, and inclusive. The $3,850 million deficit stems mainly from the gross loss on flat sales completed (i.e. where keys are issued to buyers in the FY), disbursement of CPF housing grants to eligible resale flat buyers, and expected loss for flats that commenced development in the FY.

• Specifically, HDB’s cost of flat sales completed (i.e. where keys have been issued to buyers in the FY) totalled $5,346 million, and comprises largely $3,167 million for land development costs,[3] and $2,077 million for building development costs. The remaining $102 million is attributable to the costs of flats acquired from ex-flat owners.

Table 2 shows the Home Ownership deficit from Financial Year (FY) 2019/20 to FY2021/22, and Table 3 shows specifically the components of the flat sales completed (i.e. where keys are issued to buyers in the FY) over the same period, with a breakdown of land and building development costs.

Table 2: Home Ownership Deficit










Home Ownership Deficit

[mainly from the Gross loss on flat sales completed (i.e. keys issued to buyers), CPF Housing Grants for resale flats and expected loss for flats under development. [3]]




[3] The provision for expected loss is based on the estimated selling prices, CPF Housing Grants for HDB flats, land development costs and building development costs of projects which have commenced or are still under development. The provision for expected loss will continue to be adjusted over the course of construction period due to contract variations etc., and the finalized loss will be reported as gross loss on flat sales completed (when the keys are issued to buyers).

Table 3: For flat sales completed (i.e. keys are issued to buyers) – Breakdown of Cost of flats[4]


Breakdown of Cost of sales for sales completed








Land development costs[4]





Building development costs[4]





Other costs

(largely from cost of flats acquired from ex-flat owners)





Cost of sales of completed flats


[Number of flats where keys have been issued to buyers]



[11,609 units]



[8,124 units]



[13,506 units]

[4] Land and building development costs are the actual development cost of flats launched in earlier years.

Keeping public housing affordable and accessible

12     HDB will continue to monitor housing market conditions closely and remains committed to keeping public housing affordable and accessible to support the home ownership aspirations of Singaporeans.

Issued By : MND & HDB
Date : 6 December 2022