Wednesday, 27 February 2013

The Car bubble has burst?

The government must have read my blog post on 13 Jan 2013 where i spoke about the foaming car market and that car loan should not be extended against the COEs. :oP

The new measures are truly more drastic than the previous car curbs from Feb 1995 to Jan 2003 and took the market by "surprise" where the loans are now limited to 50%-60% of the car's purchase price and the loan can only be limited to a maximum tenure of 5 years.

"Singapore's central bank said the tenures of motor vehicle loans will be capped at five years, with the maximum motor vehicle loan amount pegged to 50 or 60 per cent of the vehicle's purchase price, depending on the Open Market Value. These financing restrictions, however, do not apply to commercial vehicles and motorcycles."

 I once spoke to a second hand car dealer and there are basically "two" types of car buyers. They either take little loan or max out the loan and MAS is probably trying to "protect" the second type of buyers to prevent them from over-extending themselves.

I think this new measure is timely and will probably be one that will "burst" the car bubble. Perhaps we can see some sanity returning to the car prices soon? ... let see how the COE prices will react in March and in the coming months. The COE price chart is below :) Will COE prices finally head back to the $50k mark?

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