Certificate of entitlement (COE) premiums posted double-digit increases in the latest tender yesterday, fuelled by a surge in buying interest following an easing of car loan curbs.
The COE price for cars of up to 1,600cc and 130bhp rose by 14.2 per cent to close at a six-month high of $53,694. The COE price for cars above 1,600cc or 130bhp climbed 13.9 per cent to finish at $56,000, also the highest in six months.
The premium for Open COE, which can be used for any vehicle type but ends up mostly for bigger cars, rose by 10.9 per cent to close at a five-month high of $55,100.
Dealers were not overly surprised, as they saw showroom traffic rise after the Monetary Authority of Singapore (MAS) said two weeks ago that car buyers could borrow up to 70 per cent of the vehicle price over a maximum of seven years, up from 60 per cent and five years previously.
Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, said: "The market was pretty strong."
There were other factors. There was a three-week gap between yesterday's tender and the previous one, instead of the usual two. Hence, more orders accumulated.
Also, buyers who did not need to borrow more were spooked by the MAS announcement, which was widely expected to have upward pressure on premiums.
"They figured premiums would rise, so better to get in now than later," Mr Lim said. "In the end, these factors piled on top of each other."
However, others in the industry believe that rushing in may not work out in the long run.
Mr Neo Nam Heng, chairman of diversified motor group Prime, said that although buyers could borrow more now, they end up paying "a lot more" for their cars because of the COE price hike.
"Consumers must do their sums carefully. In the end, they will sweat for two more years," he said, referring to the longer allowable loan tenure.
Private-hire operators - whose vehicles are an increasingly popular alternative to taxis - are also believed to have contributed to yesterday's surge. But by how much exactly is unknown since the Land Transport Authority has now blocked free access to that information.
Uber-owned Lion City Rental alone has secured nearly 2,000 COEs in the last two months.
Meanwhile, the commercial vehicle COE price rose by 8 per cent to $46,434. Motorbike premiums were down by a dollar to $6,302.