Singapore Car Permit Prices Fall Most in Four Years on CurbsSharon Chen
The cost of Singapore vehicle permits fell by the most in more than four years after the government limited the amount of money banks are allowed to offer for car loans.
The price of so-called certificate of entitlements, or COEs, plunged 37 percent for cars with an engine capacity of at least 1,601 cubic centimeters or 1.6 liters, to S$58,090 ($47,000) at yesterday’s auction. Those in the open category dropped 29 percent to S$65,001, according to government data.
Both declines were the most since January 2009, when Singapore said the economy may shrink by a record. Car prices have jumped with rising permit prices, pushing up ownership costs last year to about the same as the median U.S. metropolitan home. The number of households that own a car in the city of 5.3 million people rose to 45 percent last year from 40 percent in 2008, Transport Minister Lui Tuck Yew said.
“This trend is simply not sustainable due to our land constraints, so we have to limit supply and find some equitable way of allocating it,” Lui said in Parliament yesterday. “It will take a number of bidding exercises before the effects of the recent changes become clear.”
Singapore controls pollution and congestion on its roads by selling a limited number of vehicle permits every year. There won’t be “major changes” to the car certificate market in the near term, Lui said.
Shares in Jardine Cycle & Carriage Ltd., which sells Mercedes-Benz, Mitsubishi, Kia and Citroën cars, dropped 0.9 percent to S$53.80 as of 11:17 a.m. in Singapore. WBL Corp., a dealer for Bugatti and Bentley cars, rose 1.7 percent to S$4.30.
“We estimate that this print could shave around 1 percentage point off the year-on-year headline inflation rate come April,” said Michael Wan, an economist at Credit Suisse Group AG in Singapore, which predicts price gains to average 3.5 percent this year. “We will probably have to revise down our forecast if the fall in COE premiums is sustained over the rest of this year.”
Singapore’s inflation slowed more than economists estimated in January as gains in food and housing costs eased. The consumer price index rose 3.6 percent from a year earlier, after climbing 4.3 percent in December, the Department of Statistics said on Feb. 25.