People watching the situation may also decide it is now time to enter the market.
“It may easily negate that effect of the 24 per cent (quota increase),” said Assoc Prof Ong, who is from the Department of Civil and Environmental Engineering at the National University of Singapore.
Transport Minister S Iswaran said in parliament that COE premiums are expected to rise as household incomes climb but Singapore’s car population growth remains at zero.
HOW THE ADJUSTMENT WORKS
LTA announced on Monday it would bring forward around 6,000 guaranteed deregistrations of five-year COEs. These certificates are set to expire when supply is higher, and will be distributed over the next few quarters.
Deregistrations are guaranteed for five-year COEs because car owners are not allowed to renew the certificate when it expires.
“This is in contrast to ten-year COEs, where vehicle owners have the option to renew their vehicles upon COE expiry, which thus cannot guarantee that these expired COEs will make their way back into the pool,” said Mr Yeo Swee Guan, management associate at Motorist Singapore.
The five-year COEs will be released progressively in the near future to help bolster supply instead of when they are deregistered.
LTA said the growth rate for the car population remains at zero.
“LTA has identified the specific vehicles in the vehicle registry with these five-year non-extendable COEs. When the identified vehicles are deregistered in future, their quota will not be returned to the pool for bidding,” the agency said in a media release.
Assoc Prof Ong said the authorities were “borrowing from the future”, but that the number was not overwhelming when compared to the total number of vehicles in Singapore and should not have an impact on traffic congestion.
10-YEAR COE CYCLE
Vehicle owners typically deregister their cars when the COE expires after 10 years, which means that supply of COE can be predicted based on how many cars were registered a decade ago, said Assoc Prof Theseira.
If the COE supply was high 10 years ago, deregistrations and hence supply are likely to be high now.
The LTA’s adjustment takes certificates from years when supply was expected to be high due to the 10-year cycle, and brings them to today when their incremental supply makes a bigger difference, he said.