Table [17] February 2008 HDB Resale Transactions

Table [18] January 2008 HDB Resale Transactions

Annex A
HDB imposes checklists on resale flats

From 1 May 2008, it will become mandatory for all housing agents handling HDB resale flat transactions to fill up the resale checklist before the transaction can be submitted to HDB for approval.

The checklists cover key policies and procedures that housing agents will need to advise resale flat buyers and sellers on before they commit to a transaction.

The objective of the checklist is to ensure that buyers and sellers are aware of the relevant HDB purchase and financing policies when buying/selling an HDB flat.

Under HDB's new initiative, housing agents will have to submit a completed resale checklist to HDB with a resale application. Resale applications that do not comply with this requirement will be rejected and there will be 'serious penalties' for false declarations.

Housing agents engaged by both sellers and buyers will have to go through a resale checklist with clients before an option to purchase (OTP) is granted or exercised.

Buyers and sellers who do not engage the services of housing agents need not submit a checklist.

The new resale checklist for housing agents engaged by buyers, for example, will ensure that buyers are aware of their rights as well as of financing matters. It will also highlight to them the fact that any form of ‘cash back’ arrangement, such as over or under declaration, is punishable by law.

Similarly, the checklist for sellers' housing agents will ensure prospective sellers understand the various eligibility rules.

Annex B
New HDB grant for singles living with parents

The government has announced a special grant package of $20,000 for single Singaporeans who buy a HDB resale flat and live there with their parents. As it is, regardless of who they live with, single citizens are entitled to only $11,000 in CPF housing grant, subject to eligibility criteria.

The objectives of the housing subsidy are to help Singaporeans cope with effect of inflation and encourage them to look after their parents. The new single grant is called the higher-tier Singles Grant, like the original single grant, it comes with strings attached as follows:

• must be aged 35 and above;
• must be first-time HDB buyers;
• must live in the flat with their parents for at least five years;
• must not earn more than $3,000 a month if they are buying alone.

Likewise, the parents cannot buy or own another HDB flat or invest in private property within this period. They will have to dispose of any property they own before they can qualify as co-occupiers in the subsidy application. The $20,000 grant is also subject to other HDB policies such as resale levy liability, but it can be used by singles buying flats under the Design, Build and Sell Scheme.

Like the other grants packages, the new grant can only be used for down payment on the flat or to reduce the loan quantum.

For individuals taking the Joint Singles Grant, which must have at least two singles or maximum of four singles, they must all share the property and may also share with sets of parents subject to a monthly household income ceiling of $8,000. They can get up to one singles grant and one higher-tier singles grant, or up to two singles grants or two higher-tier singles grants, subject to maximum of $40,000 in grant (no details were given yet).

Annex C
Bankruptcies sneak back despite good times

The root of bankruptcies can often be traced back to an economic boom. While the number of delinquencies may be relatively small, the number will suddenly expand when the economy slows down and job losses increase. At this moment, the delinquency rate for credit card holders has started to go up. The delinquents tend to be younger men or parents who acted as guarantors for their children.

The Singapore economy expanded 7.7% in 2007; the unemployment rate was at a decade’s low of 2.1% and job layoffs were at a 14-year-low with unionised firms paying out the fattest bonuses in 18 years. This is hardly a picture of gloom, but the problem is, people are living beyond their means.

According to the statistics from the Insolvency & Public Trustee's Office, in January this year, there were 292 petitions for bankruptcy and 215 bankruptcy orders were passed. In 2007, the average monthly bankruptcy petitions stood at 268 and the orders at 230.

This means that despite a much better harvest, the number of personal financial insolvency stays high. Creditors can petition for a person to be made bankrupt once the debt exceeds $10,000.

Deeper down the iceberg, the high absolute number of credit card delinquencies shows that many of them might have got carried away with the liberal and easily accessible credits. In fact, according to data from the Credit Bureau (Singapore) Pte Ltd (CBS), the number of delinquent credit card holders began rising steadily from July last year.

In December, there were 14,379 delinquent credit card holders representing a delinquency rate of 1.42% against 11,346 or 1.16% in July. CBS’ record also shows that a majority of those having payment problems are between 21 and 44 years old, and men make up almost 70%. Some 80% have credit cards with at least two banks. In most cases, the delinquent owes less than $5,000.

Annex D
Explaining liquidity risk

Liquidity is the ability to convert an asset to cash while preserving capital; or simply put, speed in capital recovery.

Liquidity risk arises from situations in which a property seller very keen in disposing of his property cannot do it because no buyers in the market are willing to buy at the current asking price. Since the market situation is uncertain, liquidity risk becomes particularly important to buyers who are about to make a purchase and to property sellers who are currently hold on to their properties.

In substance, liquidity risk is financial risk due to uncertain liquidity. During the 2007 property boom, real estate investments could turn out to be very liquid when investors are able to ‘flip’ properties within a matter of days the purchase for up to a few hundred thousand dollars more. As such, a ‘wealth effect’ was created that lured more speculators into the market to repeat the success of others.

However, buyers who bought over properties this way are now holding on to ‘overpriced’ items. With the depleting of the real estate bubble following the revelation of the US subprime crisis and the ensuing uncertainties in the global financial market, such liquidity is virtually gone, hence the liquidity risk in today’s market.

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