When will COE prices go down? Not for another year, experts say

When will COE prices go down? Not for another year, experts say

When will COE prices go down? Not for another year, experts say


Based on the 10-year cycle in COE supply, the quota is expected to rise only in mid- to late-2024.


SINGAPORE: Certificate of Entitlement (COE) prices for cars have hit record highs this year and are showing no signs of slowing down.


On Thursday (Aug 10), the Category B price – which is for larger and more powerful cars – rose to a record S$126,889 (US$94,300). The Category A price, which is for smaller cars, nearly reached six figures at S$99,499.


Will COE prices ever come down, and if so, when? CNA asked the experts.




Market watchers estimate that COE quotas will start to increase around late 2024 because of the 10-year cycle in supply, and prices will then drop.


Each COE is valid for 10 years, and people in Singapore generally keep their cars registered for close to the lifespan of their COE, explained Assoc Prof Walter Theseira of the Singapore University of Social Sciences (SUSS). When a car is deregistered, the COE goes back on the market. 


“Whatever supply of COEs are issued 10 years ago, (is) an extremely good predictor of the COEs that will be issued today,” Assoc Prof Theseira told CNA previously.


“Looking back 10 years, the COE supply only improves towards the end of 2014, so it's not reasonable to expect that COE supply will improve significantly before late in 2024.”


From February 2013 to April 2014, fewer than 400 COEs were available in Category A in each bidding exercise. 


The COE quota then began steadily increasing, surpassing 1,400 in Category A in May 2015. For the next four years after, the supply remained relatively high at above 1,000 in each bidding exercise.


Category B COEs follow a similar trend, with quotas increasing gradually from May 2014 and rising more quickly from February 2015 onwards. More than 1,000 COEs were available in each bidding exercise from August 2015 to January 2020.


Based on this historical 10-year cycle, COE quotas are likely to begin to rise from the middle of 2024, said Mr Yeo Swee Guan, a management associate at Motorist Singapore.


"With some time lag in the market for prices to reflect the new levels of demand and supply, one can expect to see a meaningful fall in COE prices from late 2024 onwards," he said.




COE premiums are affected by both demand and supply, but supply is easier to predict, said Assoc Prof Theseira of SUSS.


“Prices historically have tended to fall during high COE supply periods, and the same is expected during the next high COE supply cycle,” said the transport economist.


Category A quota increased and stayed high between mid-2014 and 2020, and premiums were on a downward trend for most of that time period.


For Category B, COE supply also climbed from May 2014 and stayed above 1,000 from August 2015 to January 2020. Prices started to slip in late 2013.


There may be fluctuations, but in the long run, when quotas increase and remain high, prices come down.


“Within that broad fact, there is a lot of variation auction to auction, but it is also clear that the average prices during the high COE supply years are much lower than the average prices during low COE supply years,” Assoc Prof Theseira said.


The Land Transport Authority announced a one-time adjustment in May that will boost COE supply this year.


Even then, the quota across all COE categories is just 11,019 between August and October. This translates to 3,785 COEs in Category A and 2,816 in Category B, spread over six biddings – a small number compared with high COE supply years.


For example, from November 2018 to January 2019, the total quota was 30,143, including 10,894 in Category A and 7,414 in Category B. In those months, Category A prices were under S$30,000 and Category B premiums were under S$35,000.




Beyond supply, there are other factors affecting COE prices and how much they fall, experts said.


Singapore’s transport system, land use and travel behaviour affect demand for private cars, Assoc Prof Theseira said.


“When people live, work and play in ways that benefit greatly from private car ownership, demand for cars goes up. If their needs can be met by public transport better, then car demand falls,” he said.


For example, condominiums used to be built to be accessible by private cars, but today, many developments are integrated with public transport or are close to bus and train stations, he said.


Additionally, Mr Yeo of Motorist Singapore said demand could rise if consumers can easily get loans at good rates, and policy tweaks could affect demand or supply. He cited the zero-car growth policy and the recategorisation of cars with higher engine power into Category B in February 2014.


Both Mr Yeo and Assoc Prof Theseira agreed that prices were unlikely to fall to lows seen in previous years.


“With demand for COEs consistently outstripping supply, and rising household incomes enabling consumers to be more willing to spend on cars, it would stand to reason that COE prices will not fall to prices that Singaporeans were used to in the past,” said Mr Yeo.


Ng, A. (2023b, August 10). When will COE prices go down? Not for another year, experts say. CNA. https://www.channelnewsasia.com/singapore/coe-car-prices-when-will-go-down-quota-supply-3690601

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