In a bid to cool astronomical COE prices, there will be an increase in quota for both Category A and B segments in the May to July quarter.
The Land Transport Authority (LTA) has recently announced that it will increase the Certificate of Entitlement (COE) quota for vehicular categories A and B over the next few quarters. This one-time adjustment aims to reduce supply volatility which was the root cause behind the massive price spikes.
This announcement was in response to the record-breaking COE prices, with prices in Category A crossing the S$100,000 threshold for the first time on Apr 19, 2023. Similarly, category B premiums rose to a record high of S$120,889 during the same bidding exercise.
Open category COEs, which can be used for any vehicle type but are mainly used for large cars, hit an all-time high of S$118,990.
Increase in quota
For Q2 of 2023 – between the months of May to July – the COE quota will increase from 9,575 to 10,431.
This will result in a 24 per cent increase for Category A, while Category B will see an increase of 15 per cent. This will be in effect for the remaining five bidding exercises for this quarter.
Additionally, LTA will also bring forward the guaranteed deregistrations of five-year non-extendable COEs which are due to expire. This will happen whenever supply is projected to be higher, and these will be distributed over the next few quarters. The total supply of such COEs is about 6,000.
Don’t expect prices to fall drastically
Although COE premiums have fallen slightly in the latest bidding exercise, COE prices are likely to remain high for a while, due to limited supply and increasing demand.
Delivering a ministerial statement in parliament on Monday, Transport Minister S Iswaran said Singapore “must expect the long-term trajectory for COE prices to be upwards”.
“Even as LTA makes the one-time adjustment to the COE quota in categories A and B, I would like to emphasise two points. First, this will help to lessen, but it will not eliminate, volatility in supply. There will still be a degree of supply fluctuation due to historical factors and broader market conditions. Second, the long-term upward trend of COE prices due to rising incomes and zero vehicle population growth will not abate.”
LTA has also stated that the new measure does not alter the zero Vehicle Growth Rate on the overall car population.
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