A state land meant for HDB BTO flats cannot be sold at historical price as it will be a case of undervaluation which is detrimental to the national reserves. 

When a state land is sold to HDB, HDB must put back into the reserves the fair market value of the land.

A healthy national reserves will help the future generations of Singaporeans.

What is a fair price for HDB to pay for a state land?

When selling state land to HDB for public housing developments, the fair market value is determined independently by the Chief Valuer in accordance with market conditions and established valuation principles. The chief valuer considers relevant public housing transactions and the specific parameters of the site.

"The fair market value is determined independently by the Chief Valuer in accordance with market conditions and established valuation principles,

HDB said that it does not take into account provision for a profit margin.

HDB subsidies for BTO flats benefit Singaporeans

In order to keep the price of BTO flats relatively stable, HDB study transactions of resale flats that are comparable before applying the appropriate subsidies and grants.

MND explained that market subsidies are not directly comparable across projects, launches and years, as they depend on prevailing market conditions, attributes of the BTO projects offered and the prevailing household incomes.

HDB said that with many BTO projects launched every year in different housing estates, new flat selling prices will not be constant, and will have to take into account the different attributes and location of the flats on offer.

It then applies a "significant subsidy" to the assessed market values to ensure that new flats remain affordable for BTO flat buyers.

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.

Although construction costs had jumped by nearly 30 per cent, HDB has kept BTO flat prices in check through the various subsidy.

As a result, HDB incurs significant deficits every year in its Home Ownership Programme, which are evident from its annual reports. In the latest FY2021/22, HDB recorded a deficit of about S$3.85 billion in its Home Ownership Programme.

The land sold by URA for private residential development is carried out by open tender through the Government Land Sales (GLS) programme. The property developer with the highest bid will be awarded the land for development. 

Nevertheless, transactions for land sold for private housing developments are not used to value land sold to HDB for public housing developments.