COE Affordability Index: Q1 2026 Update
How affordable is a COE? The answer depends on who is asking. For a high-income household, a $95,000 Category A premium is a manageable expense. For a median-income household, it represents nearly a full year of gross earnings. Our COE Affordability Index tracks this relationship over time, providing an objective measure of how accessible car ownership is for different segments of the population.
The COE Affordability Index Methodology
Our index measures the ratio of the average COE premium for a given category to the median annual household income. A higher ratio means less affordable. We use the following inputs:
- COE premium: Average of all bidding exercises within the quarter, by category.
- Median household income: Based on the latest available Department of Statistics data, adjusted quarterly using wage growth indicators. For Q1 2026, we use an estimated median annual household income of $112,800 (based on a monthly median of $9,400).
The index is expressed as a ratio. For example, if the average Category A premium in a quarter is $95,000 and median annual household income is $112,800, the affordability index is 0.84 — meaning the COE alone costs 84% of one year's median household income.
Q1 2026 Affordability Index
| Category | Avg Q1 Premium | Affordability Index | Q4 2025 Index | Change |
|---|---|---|---|---|
| Cat A | $95,200 | 0.84 | 0.82 | +0.02 |
| Cat B | $123,800 | 1.10 | 1.07 | +0.03 |
| Cat C | $71,500 | 0.63 | 0.62 | +0.01 |
| Cat D | $10,800 | 0.10 | 0.09 | +0.01 |
| Cat E | $127,600 | 1.13 | 1.10 | +0.03 |
Category A's affordability index of 0.84 means a median-income household would need to dedicate 84% of an entire year's gross income just to pay for the COE — before considering the cost of the car itself. Category B exceeds 1.0, meaning the COE alone costs more than a full year's median household income. These figures starkly illustrate the affordability challenge of car ownership in Singapore.
Historical Trend: 2015 to 2026
| Year (Q1) | Cat A Index | Cat B Index | Median Income (Annual) |
|---|---|---|---|
| 2015 | 0.62 | 0.80 | $96,000 |
| 2017 | 0.42 | 0.55 | $100,800 |
| 2019 | 0.28 | 0.40 | $105,600 |
| 2021 | 0.42 | 0.55 | $106,800 |
| 2023 | 0.90 | 1.18 | $109,200 |
| 2025 | 0.83 | 1.08 | $111,600 |
| 2026 | 0.84 | 1.10 | $112,800 |
The historical data reveals dramatic swings. The 2017-2019 period, when COE premiums plunged due to a surge in deregistrations, saw the affordability index drop to its most accessible levels in recent memory. The 2022-2023 spike pushed the index to record highs. Current levels are slightly below the 2023 peak but remain well above the long-term average.
Affordability by Income Percentile
The median is just one reference point. Here is how the Category A COE premium compares to household incomes at different percentiles:
| Income Percentile | Annual Income (est.) | Cat A COE as % of Income |
|---|---|---|
| 25th percentile | $67,200 | 142% |
| 50th percentile (Median) | $112,800 | 84% |
| 75th percentile | $168,000 | 57% |
| 90th percentile | $240,000 | 40% |
For households in the bottom quartile of the income distribution, a Category A COE exceeds their entire annual income. Even at the 75th percentile, the COE represents more than half a year's earnings. Only at the top decile does the COE become a more manageable fraction of income — and even then, it is substantial when added to the cost of the vehicle itself.
What This Means for Car Buyers
The affordability index underscores a reality that most Singaporeans already feel: car ownership is a premium choice in this market. For median-income households, the total cost of a new car (vehicle price + COE + ARF + insurance + road tax) can easily reach $150,000-$200,000 for a Category A vehicle, representing 1.5 to 2 times annual household income.
This does not mean car ownership is impossible for median-income households, but it does mean that it requires significant financial commitment and careful planning. Our Total Cost of Ownership Calculator and Car Loan Calculator can help you assess whether a car fits within your budget at current premium levels.
For a more detailed analysis of the salary-to-car-cost equation, see our article on affording a car on a $4,000 salary.
Frequently Asked Questions
What is a sustainable affordability index level?There is no official benchmark, but historical data suggests that an index below 0.50 for Category A corresponds to periods when car ownership is accessible to a broader segment of the population. The 2017-2020 period, when the index ranged from 0.28 to 0.50, was widely regarded as a relatively affordable era. Levels above 0.80 are associated with significant affordability strain for median-income households.
Does the index account for car loan financing?No, the index compares the lump-sum COE premium to annual income. In practice, the COE cost is typically financed as part of a car loan spread over 5-7 years, making the monthly burden more manageable than the headline ratio suggests. However, the interest cost of financing adds to the total outlay, and the index remains a useful measure of the scale of commitment required.
How does Singapore compare internationally?Singapore is in a category of its own. No other country imposes a certificate-of-entitlement system that can cost as much as the vehicle itself. In most developed countries, the regulatory cost of vehicle registration is negligible relative to household income. For a detailed comparison, see our article on Singapore car costs versus other cities.