In this sense, HDB's subsidy is just like that of the old NKF's - they "subsidise" you in the sense of selling you the product for less than you would get in the open market, but they still make money.
Given this, I was quite surprised to read Mah's claim in 2010 that some BTOs,
can be below cost. For example, for Punggol Spectra and Fernvale Crest - two recent Build-To-Order (BTO) projects - the average development cost per flat was $220,000 to $240,000, while the average selling price was $160,000 to $200,000, or $40,000 to $60,000 below cost
Of course, this conundrum can be resolved by remembering that HDB "purchases" land from the SLA (so it's just an internal transfer price). In other words, it's taking from the left pocket to put in the right pocket.
Anyhow, politically this is convenient too, for the stock of existing home owners (who are happy when flat prices rise since they feel richer) is larger than the stock of prospective home owners (who are unhappy when flat prices rise, since they will have to pay more for their first property). Of course, once the latter purchase their first property, they enter the former group and want prices to go on rising (besides the illusion of wealth, they also won't be underwater on their mortgages).
The old policy is supposedly changing, but there is still talk of HDB paying "market rate for its land and construction costs", and coupled with the usual naive market fundamentalism (e.g. public transport must be privatised, because private is always better) I don't think there will be too much of a change.