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[QUOTE=Unregistered;66610]The Dynamics of the COE market in Singapore

Demand for new cars and COEs = fn (replacement demand, household income, stock market, property market, unemployment rate, job security, political and social stability, good government, economic growth, population, consumer preference and attitudes, expectation of future prices)

Supply of COEs and new cars = fn (replacement COE (determined by car deregistrations) + 0.25% annual growth rate)

Price of COEs is therefore determined by BOTH demand and supply functions (fn) and NOT just supply.

We have seen recently why even though the supply of COEs released into the market has increased, prices of COEs did not fall much and in fact continue its rising trend. This is not strange or unbelievable. Many commentators, who may not be trained in the Economics sciences, just look at the supply of COEs to wrongly conclude that prices of COEs will fall.

The fact that COE prices continue to remain firm and continue rising concludes that DEMAND is STRONG, VERY STRONG. It shows that people who scrapped their old cars will buy new cars. This REPLACEMENT DEMAND takes up the REPLACEMENT COE SUPPLY. The fact that COE prices rise means that ADDITIONAL DEMAND for new cars and COEs is FAR GREATER than the 0.25% annual growth of COEs.

What determines the strong REPLACEMENT DEMAND and ADDITIONAL DEMAND for new cars and COEs?

There are many factors and these are listed in the demand function above.

1.	Household income – A rising household income in Singapore means that households can afford to own cars. Household incomes have generally increased over the past 10 years. It is common today for households with working couples to earn a combined $100,000 per annum. With such income, owning a $100,000 brand new car is not difficult as this means they are only spending $10,000 per year to own a car. This is only 10% of their income. If they spend another $10,000 per year on road tax, ERP charges, insurance, parking, maintenance and petrol, this is another 10% of income. Therefore the total cost for owning and using their car is only 20% of income. Compare this with taking the taxi. If each person spends $40 per day (go to work and back including booking fees), the couple would have to spend $19,200 per year. So, the opportunity cost of owning a car versus taking the taxi is small. On top of that, they will benefit from convenience and time savings. Private car ownership and usage is affordable, relative to today’s household income and taxi expenses.

2.	 Stock market and property market – When the stock market and property market do well, households can monetise their gains and use proceeds of their gains to buy new cars. Many people flip their properties, especially those who bought highly subsidised BTO flats, to earn big profits and hence enabling them to buy new cars. Eligible Singaporean households can buy cheap BTO flats TWICE. So lucky.

3.	Low unemployment rate, job security, political and social stability, good government and healthy economic growth – These factors have given Singapore consumers the confidence to buy new cars.

4.	Population – Higher population will translate to higher demand for new cars.

5.	Consumer preference and attitude – New cars are generally seen as luxury goods for most people. Many people aspire to own cars, in particular new cars. Families with new cars gain respect from neighbours and family members. To be able to own a new car is a manifestation of success and social status. This has always been the case and will always be. More families are also buying two or more cars per household, given their needs. For instance, a professional couple may own two cars as each of them earn a high salary and they may need to move around in their respective jobs.

6.	Expectation of future prices – In the immediate term, the expectation of a rise in car prices due to changes in the CEV scheme will drive many people at the sidelines to head to the showrooms to book their new cars now rather than in July 2015. In the longer term, there is also the expectation that COE prices will rise significantly in 2019 onwards due to the expected drought of COEs by then. Hence, those who want to avoid paying for $100,000 Cat A COEs will change to new cars NOW rather than in 2019 to avoid the scenario.

I hope this brief economic analysis helps those with little or no Economics knowledge in understanding how COE prices are determined. In summary, COE prices are determined by BOTH demand and supply and NOT just supply. Hence, COE prices will likely continue to remain firm and continue rising, assuming no major global economic shocks in the foreseeable future.[/QUOTE]

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Topic Review (Newest First)

12-01-2025 02:42 PM

Unregistered

Quote:

Originally Posted by Unregistered

43m single; no car , hdb fully paid. Passive income 1.7K pm. Monthly expenditure is around 1.1K.

Is it wise to step down from current stressful job with long working hours that pays 9K pm to take on a job which is less demanding and pay 2 to 3 K? Admin type of job is fine. Local Degree holder here, want to explore diploma level jobs.

Appreciate any advice. Thanks.

Yes, why not. You can even fire if you want, but choosing to work an easier job is definitely a wise choice. Keeps you away from the stress and yet keeps you occupied.

11-01-2025 09:00 AM

Unregistered

Quote:

Originally Posted by Unregistered

If you're remaining single, you can definitely take it slow and retire early too. You even have housing already. Can already enjoy life

10-01-2025 11:33 AM

Unregistered

Quote:

Originally Posted by Unregistered

In your dreams…..2.2m cpf…..joke….time to do your grab delivery job

Someone even shared he and wife have 4M in cpf accounts. Not joke

09-01-2025 08:19 PM

Unregistered

Quote:

Originally Posted by Unregistered

Couple 54 with 2 uni kids. Just done a asset review.

Property1= $3.0m (fully paid)
Property2= $1.8m (fully paid) - rental
All CPF= $2.2m
Stocks= $1.7m
Bonds= $0.4m
FD & cash in high yield= $0.8m

I think we are ready to retire soon.

In your dreams…..2.2m cpf…..joke….time to do your grab delivery job

08-01-2025 04:40 AM

Unregistered

06-01-2025 07:23 PM

Unregistered

19-12-2024 01:11 AM

Unregistered

Quote:

Originally Posted by Unregistered

You just got lucky lol your salary is low

Yah bro, don't understand why he would want to work a fixed hour job sia. But ok lah if retire now money anyhow spend 2m very fast gone also.

19-12-2024 01:10 AM

Unregistered

Quote:

Originally Posted by Unregistered

32M, reached a personal milestone this year after December bonuses, crossed 2m mark.

Properties:
I don't have any properties at the moment, planning to BTO with gf but there are some issues as her parents have placed some properties under her name. Need to figure out how to do this.

CPF:
OA: 95k
Total 155k

Cash:
I have around 108k in bank account, remaining in Tbills, fixed d and around 400k (USD) in USDT. I made around 1.4m through crypto some time back. I had 200k stuck for a few years, which caused pre-depression as diagnosed by my doc. Almost killed myself at some point, wasn't in control of myself, lucky I didn't.

Currently in gov job, salary is on the low side, 6.8k. hardly have any excess cash after expenses. I reinvest all returns from Tbills and FD because I don't think I have the discipline to manage money, will likely try to retire by 40 if possible, depending on how fast I get sick of working.

Heng you nv do anything stupid bro. Why still doing gov job? Your annual returns should be more than your annual salary.

18-12-2024 01:46 PM

Unregistered

Quote:

Originally Posted by Unregistered

You just got lucky lol your salary is low

17-12-2024 07:40 PM

Unregistered

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