Analyst explains how HDB prices homes to become more affordable

Government imposed subsidies and targeted grants.

The government imposed subsidies and targeted grants to ensure that public housing is affordable, Huttons Asia said.

One of the targeted grants for eligible buyers is mortgage service ratio (MSR), which evaluates household income to determine affordability. Subsidies are then applied to the flats to ensure MSR stays below 30% for most of the buyers. 

Qualified first-time homebuyers can apply for housing grants to make their first home more inexpensive.

“The difference between the selling prices of BTO flats and their total development costs means that HDB incurs significant losses or deficits for every BTO project. As HDB builds more BTO flats in 2022 and 2023, the losses or deficits are expected to climb,” Huttons added.