Singapore's recent COE price fluctuations, particularly the 15.4% drop in Category B, raise questions about their impact on the private housing market. While car buyers may find relief, the repercussions on home purchases and market dynamics are worth exploring.
Key Points:
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COE Price Dynamics:
- Category B COE prices fell by 15.4% in December's bidding.
- Categories A and B COEs have more than doubled since early 2020.
- The Open category (Category E) reached S$118,388 in the latest bidding.
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Impact on Home Purchases:
- Higher COE prices may limit a buyer's budget for home purchases.
- Car loan servicing becomes costlier, affecting total debt servicing ratio (TDSR) for property loans.
- Wealthy buyers may need to allocate more income for car ownership, impacting home affordability.
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Weaning off Car Ownership:
- High COE prices might drive households to forgo car ownership.
- Proportionately fewer households owning cars may increase the premium for homes near MRT stations.
- Affluent households might allocate more income to buying homes amid reduced spending on cars.
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COE vs ABSD:
- Paying Additional Buyer’s Stamp Duty (ABSD) for homes could be more acceptable than high COE prices.
- ABSD rates for citizens are 20% for the second home and 30% for subsequent homes.
- Wealthy individuals might prefer paying ABSD for multiple homes over high COE costs for cars.
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Market Dynamics:
- Housing developers adapt launch strategies amid government interventions.
- Singapore's growing market sees increased land releases for private homes.
- Residents might spend more income on home purchases as Singapore aims for a car-lite environment.
Conclusion: High COE prices pose challenges, but they also reshape lifestyle choices and spending patterns. As residents adapt to a car-lite Singapore, housing developers may find opportunities in a market driven by rising housing aspirations. The dynamic interplay between COE prices and property trends underscores the need for prospective homebuyers to stay informed.
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Source: Business Times