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Old 13-11-2014, 06:15 PM
lazyplane lazyplane is offline
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Quote:
Originally Posted by Unregistered View Post
Let's analyse objectively:

Supply of COEs is determined by number of cars deregistered and supply growth.

Demand for COEs and new cars is determined by:

1. Number of car owners who deregistered their cars and buying new cars. If 100,000 cars deregistered and all the car owners buying new cars, then supply of COEs will meet demand. No extra supply so COE prices will not drop.

2. Income levels of car buyers and their households. The income level of buyers and household has rise by doubled or more compared to 10 years ago. So a $100k COE today is considered more affordable than a $100k COE ten years ago. So, demand for COEs and new cars is a lot higher today than ten years ago.

3. Number of buyers of new cars and COEs. Ten years ago, we have a smaller population but today we have a bigger, richer population. So, today demand is a lot higher.

4. Wealth of population. Today the wealth of the population has increased by many times. For instance, ten years ago a person may have a net worth of $300k but with the rise in property prices, rise in savings, rise in salaries, the person will now have a net worth of $1m. So, a dual income household could have a net worth of $2m. So, a $100k COE is considered very cheap.

5. Flipping of BTO flats. Many youngsters bought their BTO flat 10 years ago at very low prices. Today when they sell their flat, they can mak profits of $200k - $400k easily. So, with the profits, they can buy a new car.

So, too summarise, while there may be more deregistered cars coming, the owners will want to buy new cars to replace their old cars. So there is no surplus COE. On top of that, there will be new buyers who are richer. Demand will exceed supply of COEs.

The effect will be that COE prices will continue to rise. By 2016, Cat A COE will reach $80k while Cat B COE will reach $100k.
Thank you for sharing your view. Can i check if you have any thoughts and possible counter arguments that may cause the COE to drop ?

Actually, i am really curious to see what happens one year time as i am fortunate that i have some time before making my next car purchase.
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