There has been a lot of buzz circulating around the increase in Certificate of entitlement (COE) supply and demand. With lots of prospective car buyers waiting for COE prices to soften before making their buy, we shall take a look at how COE premiums varied so much this year.
COE premiums ended higher in the tender on 22 Jun 2016 as the easing of car-financing rules by the Monetary Authority of Singapore (MAS) continued to drive demand for COEs. And just recently, COE premiums fell across all categories at the close of the bidding exercise on 7 July 2016.
With COE for small cars having the biggest dip, falling by 5.25 per cent to $52,301. Premiums for big cars (above 1,600CC or 97KW) fell 1.62 per cent to $56,089.
MAS Easing of Car Loans
Just 3 years ago, the MAS imposed guidelines for car loans. This time, car loans have been relaxed to suit the current demands.
For cars with an open market value (OMV) of $20,000 or less, buyers can borrow up to 70 per cent of the purchase price, up from 60 per cent. Buyers of cars with OMVs of more than $20,000 can now borrow up to 60 per cent of the purchase price, up from 50 per cent.
The loans tenure has also been raised to seven years, from five.
This easing of car loans have allowed potential car owners to take up interest in car ownership. Although most car traders have already found ways to circumvent the car loan curbs. With households having healthier balance sheets, potential car buyers will enter the market for COEs due to car loan restrictions being eased up.
According to UniSim’s Adjunct Associate Professor Park Byung Joon: “Everyone predicted that the COE premiums will gradually decline because of the number of COEs. But these private-hire companies are kind of unexpected”.
COE Price Changes: What Next?
With the changes of COEs premiums and car loans being eased up, many are still undecided on purchasing a car.
“If you plan to buy a car, just go ahead and don’t delay your purchase, hoping that something will happen to the COEs”, Mr Park.
Dr Theseria said: “Timing a car purchase is like timing the stock market. It is hard to do and generally doesnt work.”
So what happens next? Basically, plan your finances before making a big purchase. Check out your existing loans, your repayment plans and whether you are able to sustain the big ticket purchase. Like for all loans, read on the terms and conditions properly and check on the interest rates that are given by the loan company.
If you are interested in knowing more about car loans, you could contact us too by speaking to our loan officers on the line. We are able to provide car and personal loans to suit your financial needs.
CarPark Fee Hike: So what if COE drops?
Some people have tried to correlate this drop recently with the car parking fee hike. The government has explained this quite fairly enough. Car park charges have not changed since 2002, yet inflation as well of costs of operating public car parks have increased significantly.
HDB carparks account for 90% of carparks in Singapore, costs have increased due to several factors:
- Rising overheads in the construction industry;
- Improvements to new and existing HDB carparks, such as install multi-story carparks with lifts, and providing link bridges to connect carparks to surrounding flats;
- Additional repair works required to maintain an increasing number of ageing carparks.