1990 to 2023: The largest drops witnessed in COE history
14 Nov 2023|113,787 views
"What goes up must come down" is a law that increasingly doesn't seem to apply to our COE premiums.
Yet across all private passenger car categories, that's exactly what happened this past Wednesday. Most notable, of course, was one whopping, double-take-inducing $40,000 dip.
To better make sense of this drop, and to try to work out what is most likely to happen next, it is worth looking back at the entire history of the COE system to identify the major instances when a significant drop had occurred (and thus also understand what historically happened next).
The past Wednesday saw COE premiums for Cat B drop a whopping $40,000, which certainly came as a shock to many in the industry
The nosedive that Category B took sounds like a huge figure - and indeed, few instances across the 30-over years during which the COE system has been around can match this absolute figure. When one traverses its history - all the way back to its inception in May 1990 - you'll realise that prior to last Wednesday, a dip of above $40,000 had only been logged twice before.
The huge drop-off following the 1994 canon-event of premiums crossing the $100k line (an arbitrary figure that feels laughably normal right now) is probably less surprising. After the now-defunct Category 4 (for 'Luxury Cars') had breached the $100k barrier, a policy change brought things back down to earth, with premiums falling by $45,500. The December 1997 to January 1998 period, however, actually takes honours for the largest absolute drop we've seen so far: Premiums in Category 3 plummeted an incredible $64,050, from $64,100 all the way to a mere $50.
While the $40k figure is certainly large (and significant), it's worth taking a look back at the history of the COE system to identify other significant drops, and see if history can guide us on what will likely happen next
To be clear, five-figure dips of such a magnitude are not to be undermined; they are undeniably clear signs that business is not as per usual, and that something larger has rocked the forces of consumer demand. Wednesday's event arrived after the government announced a new 'cut-and-fill' approach to COE supply as a further bid to reduce the volatility in prices. Consequently, the market reacted.
Nonetheless, looking at absolute figures obscures the reality that COE premiums have trended higher over the years. Take the $20,000 to $30,000-ish baseline in 2003 for instance; a $10,000 rise or fall then would actually compute as more drastic than the $40,000 dip (from $150,000) we've just experienced.
As such, when hunting down the largest drops in COE premiums across the system's history, it is not solely absolute figures that we're focusing on, but percentage points that we've tried to sieve out to understand how exactly a nosedive can occur.
With that, these are six of the most drastic falls we've witnessed over the last 33 years:
1992 was a very different time - the Sentosa Causeway is officially opened, Nirvana came to Singapore, and the COE system was split into four categories
6. -92.86%, August to September 1992: From $21,008 to $1,500 (Cat 4)
The earlier days of the COE system, for those not old enough to remember, saw the car market spread out into narrower categories based on their engine capacities. Instead of the A, B and E categories that now associate with private passenger cars, we had Categories 1 to 4, on top of the Open category under which all sorts of vehicles could be registered.
| Category 1 | Category 2 | Category 3 | Category 4 |
| Small cars, 1,000cc or less | Medium cars, 1,001cc-1,600cc, or taxis | Big cars, 1,601cc to 2,000cc | Luxury cars, 2,001cc or more |
While the specific stratification of cars based on their engine capacities may have sounded like a good idea (and was indeed reflective, perhaps, of the automotive industry back then), the existence of more categories induces a potential headache: Quota has to be spread out more thinly, and demand for each specific segment is harder to track. As the headlines described it, the 92.86% fall in August 1992 seen in the Luxury Car category was "no more than a fluke". Only 70 people had bid for COEs in this category during that particular bidding round, with 65 of them succeeding - and earning themselves an undeniable bargain with a $1,500 COE, compared to $21,008 the previous round.
Evidence that this was truly a fluke - and not the market norm - was the fact that premiums had gone up by an average of $1,900 in all of the other five car categories in the same round. The honorary secretary of the Motor Traders' Association noted that this was "not really a reflection of the market", and as spokesperson for the Registry of Vehicles explained, "When you have a very small quota, the results can fluctuate wildly."
Sure enough, premiums leaped back up above $20,000 in September.
The Gulf Crisis sent oil prices skyrocketing, which led to a period of global economic uncertainty - COE premiums through the late 1990 to early 1991 period had notable falls, with the largest in March 1991
5. -93.00%, February to March 1991: From $3,001 to $210 (Category 4)
Singapore's roads (and Singapore as a whole) were certainly far less congested back when the COE system hadn't even been in force for a full year yet - which is probably why premiums were so low. Nonetheless, there was a larger force at play still, helping to keep the lid on prices - and in fact, sending them crashing down at one point: The Gulf Crisis.
In November 1990, a multinational military coalition was adopted by the U.N. to liberate Kuwait, which had been invaded by Iraq. Though far from Singapore on the surface, the war sent oil prices skywards - and left uncertain economic outlooks reverberating across the world in its wake.
It was within this period of instability that the 93.00% drop for the 'Medium Car' category was logged in early 1991 - but look around the 1990 to 1991 period and similarly precipitous falls are visible (Cat 3 fell 89.23% in November 1990; Cat 1 fell 89.53% in February 1991). As the Gulf War came to a close in March 1991, so too did consumer sentiment pick up, with The Business Times reporting towards the close of that 1991 that premiums had shot up by as high as 98% in the first tender exercise following the crisis' end. Its report also noted that dealers "were unanimous in the view that the increases were expected as 'consumers have become more confident' since the Gulf War ended on Feb 28."
The 2009 subprime mortgage crisis in the U.S.A reverberated across the world - economic anxiety meant that few people were interested in buying a new car, leading to a major crash in COE prices
4. -93.52%, January 2009: From $3,089 to $200 (Category B)
Nearly 20 years on, the globe was reeling yet again from another financial meltdown - albeit on a wider and deeper scale, following the subprime mortgage crisis in the U.S.A.
Many remember our Category A COEs being cheaper than a plate of chicken rice at one point during this period (hang on just a bit for that), so it's likely that that particular event obscured the fact that Category B fell to nearly-unprecedented lows too during this period. For the bidding round on 22 January 2009, demand was so weak (1,179 bids, out of the 1,099 certificates available) that even five minutes before the end of the tender, the prevailing bid was still at the minimum value of $1. Eventually, it levelled out at a meagre $200 - representing a 93.52% crash from the $3,089 in the previous round (already a low figure).
As one manager of a dealership put it, "Nobody wants to buy a car now. Everyone is worried about the economy." There were just 1,179 bids for the 1,099 Cat B COEs available. "Who is thinking of a new car when there is so much bad news in the papers and talk that there will be big job cuts after Chinese New Year?" he asked.
2001 saw a unexpected drop in Cat A COE premiums, but is also recognised as being part of the larger overall downward trend in the automotive industry
3. -99.69%, May to June 2001: From $32,100 to $101 (Category A)
In June 2001, COE premiums for Cat A fell to an all time low (at that time). However, unlike in many of these other circumstances where there were clear and obvious external forces at work (both politically and financially), the reasons for this significant drop is less obvious. It was even described as a "freak tender outcome" by The Business Times back then. "Traders from all the main players pointed to order cancellations as one reason for the crash, although no one would openly cite the number of customers they had lost since last month." A sales facilitator at Cars & Cars called it "out of the blue moon".
A multitude of reasons could explain this unexpected drop. Across the board, COE premiums had already been trending downwards across 2000 and into 2001, which reflects a weak economic sentiment and was "part of the overall downward trend in the automobile industry". With premiums for Cat B and E actually tracking marginally lower than Cat A across previous months, this could have also encouraged buyers to shop around for more premium choices. And, the impending move to an open bidding system the following month could further incentivise buyers to wait out their purchases.
Expectedly, Cat A premiums shot right back upwards in July. Yes, still to a relatively reasonable $26,239 (fairly consistent with premiums across Cat B and E), but still a 25,879% increase.
1998 saw the introduction of the automated ERP system as we currently know it, and also a growing regional financial crisis that dampened car-buying sentiment across the board
2. -99.92%, Dec 1997 to Jan 1998: From $64,500 to $50 (Category 3)
The hand that the nation's general economic outlook has in shaping car buying behaviour should come as no surprise at this point - but it appears one very special, individual bidder was partially responsible for the particular plunge in end-December 1997.
The broad strokes of the picture here are the same as in many of the other stories on this list. This time, however, it was Southeast (and East) Asia in particular that was facing a financial crisis. When 1997 came to a close, Singapore's stock market was already not faring well - but our neighbours, including Malaysia and Indonesia, had it worse still. As then-president of the Automobile Association, Gerard Ee, said: "There has been a continuous dose of bleak news. Many people are expecting hard times ahead. In which case, the wisest thing to do is hang on to cash."
With only 316 bids placed for the 336 COEs available in Category 3, premiums would have softened either way. But this particular round also happened to include one persistent - and very lucky - businessman by the name of Mr. Eddie Chua… who had decided some time around June that he would continuously try $50 bids within the category.
His persistence paid off. With supply outpacing demand, premiums dropped 99.92% from $64,500 to just $50 (again, this is the highest absolute slide we've seen), as bidders of that round benefitted from Mr. Chua's $50 gamble. "I won't say this is a fluke. I have been monitoring the market and looking at the figures in the newspapers," Mr. Chua explained when The New Paper interviewed him in early 1998, pointing out that the number of bids had exceeded the quota by smaller margins in the months prior. The crash led to some dealers slashing prices of their cars (the Toyota Camry went from $175,627 to $165,665, for example; the Mitsubishi Galant's price sank even more, landing at $110,000 from $150,000). COE prices in Category 3 soared back up to $43,880 the next month.
The 2008 recession left little untouched - amidst the worst global financial crisis since The Great Depression, the COE premium for Cat A fell to a now-fabled $2
1. -99.98%, Nov 2008: From $10,455 to… $2 (Category A)
An oft-recited legend in COE history, a microcosm of the dire state our nation was in back then, and a good reminder as to why we don't actually want COEs to free-fall by nearly 100%.
Said to be the worst global financial crisis since The Great Depression, virtually nobody was left untouched during the 2008 recession. As big-ticket items, cars were naturally not foremost on the minds of most belt-tightening Singaporeans. Loan approvals were also becoming more stringent (pre-crisis, seven out of 10 loan applications used approved; that number shrank to four during this period). And it did not help that the Japanese yen was strengthening against the Singapore dollar at this point, pushing up the OMVs of many Japanese family cars… most of which happen to qualify for the criteria of having an engine not bigger than 1,600cc.
And so, in November 2008, the sharpest dive we've ever witnessed in COE premiums was recorded in Category A, with premiums free-falling 99.98% from $10,455 to $2. Fascinatingly, this particular thread from Mycarforum hasn't gone defunct yet, and lays bare the real-time reactions of the public to the news at that point. (Responses range from "chun boh!?!??!" and "must be LTA computer glitch.." to astute assessments that the resale values of cars registered using COEs from that round would be extremely low).
To be clear, premiums picked up to a more reasonable $7,721 in the following round - but demand also remained soft for a good half-year as the economy recovered, before finally crossing the $10,000 line in June 2009.
Let's be clear: A sudden COE free fall and a consistent downward trend are most certainly not the same thing - it would be foolish to expect major drops to happen repeatedly
Note of caution: Free falls and consistent downward trends are not the same
Besides putting the $40,000 dip into context - that the figure is perhaps less dramatic than you might think - trawling through the annals of our COE system's past is also helpful in bringing another reality to light: That unless something truly earth-shattering is occurring, free falls are often not succeeded by further free falls.
In other words: A big drop has rarely been indicative of a consistent, reassuring decline. On the contrary, they would always be succeeded by price climbs. Invariably, the market corrects back to the norm.
When COE previously peaked in 2013, policy changes followed to try to curb demand - this led to a significant statistical dip in premiums, followed (expectedly) by a correction back to 'normal' market levels
Interestingly, the previous COE price peak - from exactly one decade ago - holds up a mirror to what we are currently facing, and can help shed some light on what to expect moving forward. In the face of widespread dissatisfaction with sky-high premiums, policy changes were also introduced back in 2013 - albeit to curb demand (rather than to bolster supply, as we have just seen). The loan period was halved from 10 to five years; a tiered ARF structure also came into play for the first time. The 37.31% decline Category B saw in March 2013 from $92,667 to $58,090 - the month in which the new rules took effect - coincidentally marks the most significant statistical dip (again, not absolute) seen most recently before last Wednesday.
But we already know what happened after that. As supply back in 2013 remained low, premiums dipped slightly on average, but didn't stabilise within the $50,000-ish range until 2016 swung around. The real downward trend? That only came about in 2018, when quota increased significantly, and these were crucially marked by gentle, rather than sharp drops.
With the most recently-announced 'cut-and-fill' adjustments, it's hard to predict where exactly COE prices will stabilise in the near-future, but one thing is for sure - don't expect another $40,000 drop
What happens now is still an open question. The measures put into place by the LTA are unprecedented in that they target the supply aspect of the system, and will play out in a manner that no one can predict for now.
But given that our vehicle population freeze is firmly in place - and given that our roads are now also filled with blue-stickered cars - the opposite of what we mentioned at the start is more likely to be true: What goes down must come up. As the market adjusts yet again to the new measures, prices may indeed start to fall across the board.
For good reason, however, we're just not expecting them to fall to the lows we've seen in the past - and we're certainly not expecting another $40,000 drop.
"What goes up must come down" is a law that increasingly doesn't seem to apply to our COE premiums.
Yet across all private passenger car categories, that's exactly what happened this past Wednesday. Most notable, of course, was one whopping, double-take-inducing $40,000 dip.
To better make sense of this drop, and to try to work out what is most likely to happen next, it is worth looking back at the entire history of the COE system to identify the major instances when a significant drop had occurred (and thus also understand what historically happened next).
The past Wednesday saw COE premiums for Cat B drop a whopping $40,000, which certainly came as a shock to many in the industry
The nosedive that Category B took sounds like a huge figure - and indeed, few instances across the 30-over years during which the COE system has been around can match this absolute figure. When one traverses its history - all the way back to its inception in May 1990 - you'll realise that prior to last Wednesday, a dip of above $40,000 had only been logged twice before.
The huge drop-off following the 1994 canon-event of premiums crossing the $100k line (an arbitrary figure that feels laughably normal right now) is probably less surprising. After the now-defunct Category 4 (for 'Luxury Cars') had breached the $100k barrier, a policy change brought things back down to earth, with premiums falling by $45,500. The December 1997 to January 1998 period, however, actually takes honours for the largest absolute drop we've seen so far: Premiums in Category 3 plummeted an incredible $64,050, from $64,100 all the way to a mere $50.
While the $40k figure is certainly large (and significant), it's worth taking a look back at the history of the COE system to identify other significant drops, and see if history can guide us on what will likely happen next
To be clear, five-figure dips of such a magnitude are not to be undermined; they are undeniably clear signs that business is not as per usual, and that something larger has rocked the forces of consumer demand. Wednesday's event arrived after the government announced a new 'cut-and-fill' approach to COE supply as a further bid to reduce the volatility in prices. Consequently, the market reacted.
Nonetheless, looking at absolute figures obscures the reality that COE premiums have trended higher over the years. Take the $20,000 to $30,000-ish baseline in 2003 for instance; a $10,000 rise or fall then would actually compute as more drastic than the $40,000 dip (from $150,000) we've just experienced.
As such, when hunting down the largest drops in COE premiums across the system's history, it is not solely absolute figures that we're focusing on, but percentage points that we've tried to sieve out to understand how exactly a nosedive can occur.
With that, these are six of the most drastic falls we've witnessed over the last 33 years:
1992 was a very different time - the Sentosa Causeway is officially opened, Nirvana came to Singapore, and the COE system was split into four categories
6. -92.86%, August to September 1992: From $21,008 to $1,500 (Cat 4)
The earlier days of the COE system, for those not old enough to remember, saw the car market spread out into narrower categories based on their engine capacities. Instead of the A, B and E categories that now associate with private passenger cars, we had Categories 1 to 4, on top of the Open category under which all sorts of vehicles could be registered.
| Category 1 | Category 2 | Category 3 | Category 4 |
| Small cars, 1,000cc or less | Medium cars, 1,001cc-1,600cc, or taxis | Big cars, 1,601cc to 2,000cc | Luxury cars, 2,001cc or more |
While the specific stratification of cars based on their engine capacities may have sounded like a good idea (and was indeed reflective, perhaps, of the automotive industry back then), the existence of more categories induces a potential headache: Quota has to be spread out more thinly, and demand for each specific segment is harder to track. As the headlines described it, the 92.86% fall in August 1992 seen in the Luxury Car category was "no more than a fluke". Only 70 people had bid for COEs in this category during that particular bidding round, with 65 of them succeeding - and earning themselves an undeniable bargain with a $1,500 COE, compared to $21,008 the previous round.
Evidence that this was truly a fluke - and not the market norm - was the fact that premiums had gone up by an average of $1,900 in all of the other five car categories in the same round. The honorary secretary of the Motor Traders' Association noted that this was "not really a reflection of the market", and as spokesperson for the Registry of Vehicles explained, "When you have a very small quota, the results can fluctuate wildly."
Sure enough, premiums leaped back up above $20,000 in September.
The Gulf Crisis sent oil prices skyrocketing, which led to a period of global economic uncertainty - COE premiums through the late 1990 to early 1991 period had notable falls, with the largest in March 1991
5. -93.00%, February to March 1991: From $3,001 to $210 (Category 4)
Singapore's roads (and Singapore as a whole) were certainly far less congested back when the COE system hadn't even been in force for a full year yet - which is probably why premiums were so low. Nonetheless, there was a larger force at play still, helping to keep the lid on prices - and in fact, sending them crashing down at one point: The Gulf Crisis.
In November 1990, a multinational military coalition was adopted by the U.N. to liberate Kuwait, which had been invaded by Iraq. Though far from Singapore on the surface, the war sent oil prices skywards - and left uncertain economic outlooks reverberating across the world in its wake.
It was within this period of instability that the 93.00% drop for the 'Medium Car' category was logged in early 1991 - but look around the 1990 to 1991 period and similarly precipitous falls are visible (Cat 3 fell 89.23% in November 1990; Cat 1 fell 89.53% in February 1991). As the Gulf War came to a close in March 1991, so too did consumer sentiment pick up, with The Business Times reporting towards the close of that 1991 that premiums had shot up by as high as 98% in the first tender exercise following the crisis' end. Its report also noted that dealers "were unanimous in the view that the increases were expected as 'consumers have become more confident' since the Gulf War ended on Feb 28."
The 2009 subprime mortgage crisis in the U.S.A reverberated across the world - economic anxiety meant that few people were interested in buying a new car, leading to a major crash in COE prices
4. -93.52%, January 2009: From $3,089 to $200 (Category B)
Nearly 20 years on, the globe was reeling yet again from another financial meltdown - albeit on a wider and deeper scale, following the subprime mortgage crisis in the U.S.A.
Many remember our Category A COEs being cheaper than a plate of chicken rice at one point during this period (hang on just a bit for that), so it's likely that that particular event obscured the fact that Category B fell to nearly-unprecedented lows too during this period. For the bidding round on 22 January 2009, demand was so weak (1,179 bids, out of the 1,099 certificates available) that even five minutes before the end of the tender, the prevailing bid was still at the minimum value of $1. Eventually, it levelled out at a meagre $200 - representing a 93.52% crash from the $3,089 in the previous round (already a low figure).
As one manager of a dealership put it, "Nobody wants to buy a car now. Everyone is worried about the economy." There were just 1,179 bids for the 1,099 Cat B COEs available. "Who is thinking of a new car when there is so much bad news in the papers and talk that there will be big job cuts after Chinese New Year?" he asked.
2001 saw a unexpected drop in Cat A COE premiums, but is also recognised as being part of the larger overall downward trend in the automotive industry
3. -99.69%, May to June 2001: From $32,100 to $101 (Category A)
In June 2001, COE premiums for Cat A fell to an all time low (at that time). However, unlike in many of these other circumstances where there were clear and obvious external forces at work (both politically and financially), the reasons for this significant drop is less obvious. It was even described as a "freak tender outcome" by The Business Times back then. "Traders from all the main players pointed to order cancellations as one reason for the crash, although no one would openly cite the number of customers they had lost since last month." A sales facilitator at Cars & Cars called it "out of the blue moon".
A multitude of reasons could explain this unexpected drop. Across the board, COE premiums had already been trending downwards across 2000 and into 2001, which reflects a weak economic sentiment and was "part of the overall downward trend in the automobile industry". With premiums for Cat B and E actually tracking marginally lower than Cat A across previous months, this could have also encouraged buyers to shop around for more premium choices. And, the impending move to an open bidding system the following month could further incentivise buyers to wait out their purchases.
Expectedly, Cat A premiums shot right back upwards in July. Yes, still to a relatively reasonable $26,239 (fairly consistent with premiums across Cat B and E), but still a 25,879% increase.
1998 saw the introduction of the automated ERP system as we currently know it, and also a growing regional financial crisis that dampened car-buying sentiment across the board
2. -99.92%, Dec 1997 to Jan 1998: From $64,500 to $50 (Category 3)
The hand that the nation's general economic outlook has in shaping car buying behaviour should come as no surprise at this point - but it appears one very special, individual bidder was partially responsible for the particular plunge in end-December 1997.
The broad strokes of the picture here are the same as in many of the other stories on this list. This time, however, it was Southeast (and East) Asia in particular that was facing a financial crisis. When 1997 came to a close, Singapore's stock market was already not faring well - but our neighbours, including Malaysia and Indonesia, had it worse still. As then-president of the Automobile Association, Gerard Ee, said: "There has been a continuous dose of bleak news. Many people are expecting hard times ahead. In which case, the wisest thing to do is hang on to cash."
With only 316 bids placed for the 336 COEs available in Category 3, premiums would have softened either way. But this particular round also happened to include one persistent - and very lucky - businessman by the name of Mr. Eddie Chua… who had decided some time around June that he would continuously try $50 bids within the category.
His persistence paid off. With supply outpacing demand, premiums dropped 99.92% from $64,500 to just $50 (again, this is the highest absolute slide we've seen), as bidders of that round benefitted from Mr. Chua's $50 gamble. "I won't say this is a fluke. I have been monitoring the market and looking at the figures in the newspapers," Mr. Chua explained when The New Paper interviewed him in early 1998, pointing out that the number of bids had exceeded the quota by smaller margins in the months prior. The crash led to some dealers slashing prices of their cars (the Toyota Camry went from $175,627 to $165,665, for example; the Mitsubishi Galant's price sank even more, landing at $110,000 from $150,000). COE prices in Category 3 soared back up to $43,880 the next month.
The 2008 recession left little untouched - amidst the worst global financial crisis since The Great Depression, the COE premium for Cat A fell to a now-fabled $2
1. -99.98%, Nov 2008: From $10,455 to… $2 (Category A)
An oft-recited legend in COE history, a microcosm of the dire state our nation was in back then, and a good reminder as to why we don't actually want COEs to free-fall by nearly 100%.
Said to be the worst global financial crisis since The Great Depression, virtually nobody was left untouched during the 2008 recession. As big-ticket items, cars were naturally not foremost on the minds of most belt-tightening Singaporeans. Loan approvals were also becoming more stringent (pre-crisis, seven out of 10 loan applications used approved; that number shrank to four during this period). And it did not help that the Japanese yen was strengthening against the Singapore dollar at this point, pushing up the OMVs of many Japanese family cars… most of which happen to qualify for the criteria of having an engine not bigger than 1,600cc.
And so, in November 2008, the sharpest dive we've ever witnessed in COE premiums was recorded in Category A, with premiums free-falling 99.98% from $10,455 to $2. Fascinatingly, this particular thread from Mycarforum hasn't gone defunct yet, and lays bare the real-time reactions of the public to the news at that point. (Responses range from "chun boh!?!??!" and "must be LTA computer glitch.." to astute assessments that the resale values of cars registered using COEs from that round would be extremely low).
To be clear, premiums picked up to a more reasonable $7,721 in the following round - but demand also remained soft for a good half-year as the economy recovered, before finally crossing the $10,000 line in June 2009.
Let's be clear: A sudden COE free fall and a consistent downward trend are most certainly not the same thing - it would be foolish to expect major drops to happen repeatedly
Note of caution: Free falls and consistent downward trends are not the same
Besides putting the $40,000 dip into context - that the figure is perhaps less dramatic than you might think - trawling through the annals of our COE system's past is also helpful in bringing another reality to light: That unless something truly earth-shattering is occurring, free falls are often not succeeded by further free falls.
In other words: A big drop has rarely been indicative of a consistent, reassuring decline. On the contrary, they would always be succeeded by price climbs. Invariably, the market corrects back to the norm.
When COE previously peaked in 2013, policy changes followed to try to curb demand - this led to a significant statistical dip in premiums, followed (expectedly) by a correction back to 'normal' market levels
Interestingly, the previous COE price peak - from exactly one decade ago - holds up a mirror to what we are currently facing, and can help shed some light on what to expect moving forward. In the face of widespread dissatisfaction with sky-high premiums, policy changes were also introduced back in 2013 - albeit to curb demand (rather than to bolster supply, as we have just seen). The loan period was halved from 10 to five years; a tiered ARF structure also came into play for the first time. The 37.31% decline Category B saw in March 2013 from $92,667 to $58,090 - the month in which the new rules took effect - coincidentally marks the most significant statistical dip (again, not absolute) seen most recently before last Wednesday.
But we already know what happened after that. As supply back in 2013 remained low, premiums dipped slightly on average, but didn't stabilise within the $50,000-ish range until 2016 swung around. The real downward trend? That only came about in 2018, when quota increased significantly, and these were crucially marked by gentle, rather than sharp drops.
With the most recently-announced 'cut-and-fill' adjustments, it's hard to predict where exactly COE prices will stabilise in the near-future, but one thing is for sure - don't expect another $40,000 drop
What happens now is still an open question. The measures put into place by the LTA are unprecedented in that they target the supply aspect of the system, and will play out in a manner that no one can predict for now.
But given that our vehicle population freeze is firmly in place - and given that our roads are now also filled with blue-stickered cars - the opposite of what we mentioned at the start is more likely to be true: What goes down must come up. As the market adjusts yet again to the new measures, prices may indeed start to fall across the board.
For good reason, however, we're just not expecting them to fall to the lows we've seen in the past - and we're certainly not expecting another $40,000 drop.
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