In the ever-evolving landscape of our automotive market, the Certificate of Entitlement (COE) system has taken centre stage once again as it reaches record-breaking heights. As of the 1st COE bidding exercise for September 2023, both Category B and the Open Category have hit an astonishing record of S$134,889 and S$137,000, respectively. This surge in COE premiums has far-reaching implications, not only for car buyers but also for the broader property market.
In this article, we delve into the details of this unprecedented price hike, its underlying causes, and the potential impact on property purchasing behaviour.
COE premiums hit record high for Category B and Open Category
In the latest COE bidding exercise for September 2023, the premiums for both Category B and the Open Category have reached unprecedented levels, causing waves of concern and speculation among car enthusiasts and industry experts alike.
Here’s a summary of it:
| Category | Current COE | Previous COE | Increase/ Decrease |
September PQP | Bids Received |
| A (Cars up to 1600CC & 97KW) | S$101,000 | S$100,000 | + S$1,000 | S$97,652 | 840 |
| B (Cars above 1600CC or 97KW) | S$134,889 | S$129,890 | + S$4,999 | S$122,414 | 723 |
| C (Goods Vehicle & Bus) | S$82,889 | S$82,801 | + S$88 | S$82,345 | 182 |
| D (Motorcycles) | S$10,901 | S$11,402 | – S$501 | S$10,868 | 758 |
| E (Open) | S$137,000 | S$131,000 | + S$6,000 | – | 219 |
Why are COE prices increasing?
Industry insiders and experts have identified several contributing factors to this sudden surge in COE premiums:
- Strong demand for luxurious multi-seater cars: Limousine service operators have shown a strong preference for large, luxurious multi-seater cars. Notable models like the Toyota Alphard and the upcoming Toyota Vellfire have been brought in by parallel importers, leading to increased COE bids for registration.
- Vehicle Emissions Scheme: Car distributors are also keen to clear their existing stock of vehicles before tighter pollutant thresholds, scheduled for January 1, 2024, under the enhanced Vehicle Emissions Scheme come into effect. This further fuels the demand for COEs in the remaining tender exercises for 2023.
- Lower supply of COE: Since 2018, the vehicle growth rate in Singapore has been zero, which means that the number of COEs available for bidding has been limited. This has led to a lower supply of COE, which could drive up prices due to increased competition among bidders.
- High demand for COEs: The high demand for COEs, coupled with a government policy to keep supply steady by maintaining zero annual growth in car population, has also contributed to the recent rise in COE prices.
Read also: Would a COE model work in our housing plans?
COE premiums and housing decisions
While COE prices are primarily associated with car ownership, their fluctuations can have indirect effects on property decisions. The inverse relationship between COE prices and property choices is noteworthy.
Here’s how COE premiums can affect housing decisions:
- Public transportation usage: As COE prices rise, individuals may opt for increased usage of public transportation, particularly if they find car ownership less economically feasible. This shift can lead to higher demand for properties located near public transportation hubs, such as MRT stations and bus terminals.
- Private parking spaces: Conversely, when COE prices decrease, car ownership becomes more accessible, potentially driving up demand for properties with private parking spaces or garages. These properties become attractive to car owners who prioritise the convenience of having their vehicles parked on their premises.
Properties for sale near popular MRT stations
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Wrapping up
In summary, the soaring COE premiums in Singapore, especially in Category B and the Open Category, are reshaping not only the automotive landscape but also influencing property buying behaviour. The intricate relationship between these two aspects underscores the need for prospective property buyers to consider the broader economic context when making housing decisions.
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