Long-term upward trend of COE prices 'will not abate': Iswaran
Could the end of $100,000 COE prices finally be in sight?
Likely not, it seems.
In Parliament on Monday (May 8), Minister for Transport S. Iswaran spoke about COE prices, and how this upward trend "will not abate".
Iswaran was delivering a Ministerial Statement in response to Parliamentary Questions from several Members of Parliament (MP) relating to the demand and cost of COEs in Singapore.
Elaborating on reasons for the upward trend, Iswaran said that COE prices "reflect demand for a limited and falling supply of COEs", adding that demand in all categories has "remained resilient", especially as the economy recovers post-Covid-19.
Incomes, he added, have also been rising over the long term, pointing out a recent report by Professor Raymond Ong last Sunday, which stated that the ratio of COE price to median monthly household income has fallen from 11 to one in 2013 to 9 to one today, due to the rise in household incomes.
"As household incomes continue to rise in the coming years, coupled with our policy of zero growth in the car population, we must expect the long-term trajectory for COE prices to be upwards," he said.
In Parliament, he also highlighted Singapore's policy of zero growth in the car population, one which was first implemented by the Land Transport Authority (LTA) in February 2018, in view of Singapore's land constraints.
Car COE supply to rise
Iswaran went on to say that COE supply is determined primarily by car de-registrations in preceding quarters, which he said has been "relatively low of late".
He added that the Ministry of Transport has, over the past few months, made "several moves" to reduce the volatility in quota supply. This includes using the moving average of de-registrations in the four preceding quarters to compute COE quotas.
"These moves have helped to mitigate quarter-on-quarter volatility," he said.
He also announced that the LTA will bring forward and redistribute the supply from 5-year COEs due to expire in the next projected supply peak.
"As these 5-year COEs cannot be extended and have to be de-registered, LTA will be able to identify the exact number with certainty.
"This supply will be re-distributed over several quarters starting from the next bidding exercise. This move will increase quota supply in the next bidding exercise by about 24 per cent in Cat A and 15 per cent in Cat B," said Iswaran.
In a statement on Monday, LTA said it will redistribute about 6,000 five-year COEs gradually over the next few quarters, starting from the next bidding exercise which begins on May 15.
This means that the COE quota for May to July 2023 will be increased from 9,575 to 10,431.
Less than 3% of car COEs allocated to foreigners: Iswaran
Addressing some other questions about the possible reasons for the upward trend in COE prices, Iswaran said that private-hire cars (PHC) and taxis have made up about 10 per cent of the total car population in Singapore in the past four years.
Despite this, between 2015 and 2017 — which saw the fastest growth in PHC numbers — there was no "commensurate upward pressure on COE prices" in that period.
"Conversely, while COE prices have been rising over the past several quarters, demand from PHC companies has in fact been moderating," he said.
He also addressed questions posed by MPs Lim Wee Kiak and Joan Pereira about the impact of foreigners on COE demand.
Iswaran said that from July 2020 to December 2022, less than three per cent of car COEs were allocated to foreigners on average — a figure which has remained stable.
Despite these steps to improve the efficiency of the COE system, Iswaran reiterated the government's key strategy of building a "car-lite society" with accessible and inclusive transport for all Singaporeans, which would lessen the need for and use of private cars.
Fewer youth aspire to own car, says survey
The transport minister also brought up that there are "encouraging trends" in this direction from Singaporean youth, as a recent survey done by The Straits Times revealed that the percentage of youth who aspire to own a car has fallen from around 65 per cent in 2016 to around 50 per cent in 2022.
Speaking to AsiaOne, 27-year-old Felicia Lum said that buying a car is not a "feasible" idea, given her current financial situation.
"As much as I would like to own the car for convenience's sake, I can't afford it given my current financial commitments, as I also need to save up for my BTO," said the human resource executive.
"It's more of a want than a need at this point, but at least I can get by with public transport."
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