Singapore car COE prices to remain high due to limited supply and strong demand
Prices for Singapore’s Certificate of Entitlement (COE) are likely to remain high as demand continues to outstrip limited supply. Despite a dip in premiums for cars after the latest bidding exercise closed on 4 May, it is too early to tell if prices have peaked, said analysts who forecast that COE premiums for cars may rise in the next few cycles.
Raymond Tang, the market analyst at Yong Lee Seng Motor, anticipates that Category A and B premiums will hover around the SGD100,000 ($71,000) mark until the end of the year, with slight rises and dips. “This is a cycle, you cannot force the supply to be increased,” said Tang.
The supply of COEs is based on the number of deregistrations, which is usually when the COE expires 10 years after registration. As the number of cars registered 10 years ago is linked to the number of cars being deregistered now, which in turn affects the number of COEs being issued.
Singapore University of Social Sciences economist Walter Theseira does not expect any “significant change” in premiums for private cars. “The underlying structural issue of low supply will remain for many months, and unless there are significant changes in demand, there will not be any large movement downwards,” he said.
Demand is tricky to predict as it relies on macroeconomic and business conditions, but for now, it remains “extremely high”, added Theseira.
For premium models, the COE is less than half the cost of the car. “There is no shortage of premium car models on the road in Singapore. So for the luxury market in Singapore, there is more than enough willingness to absorb higher COE prices, in order to get their car now.”
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