The COEkaki Affordability Index: Tracking How Affordable Cars Really Are
Introducing the COEkaki Affordability Index
Headlines about COE prices often lack context. Is $95,000 for a Category A COE "expensive" or "cheap"? The absolute number only tells part of the story. What matters is how that price relates to what Singaporeans actually earn.
That's why we created the COEkaki Affordability Index (CAI) — a quarterly metric that measures how many months of the median full-time employed resident salary it takes to purchase a typical entry-level car (Category A) in Singapore.
How We Calculate the Index
The formula is straightforward:
CAI = Total Car Cost ÷ Median Monthly Salary
Where:
- Total Car Cost = Typical Category A car price (OMV $25,000) + COE + ARF + GST + registration + first-year insurance and road tax
- Median Monthly Salary = Median gross monthly income of full-time employed residents, as published by MOM (Ministry of Manpower) in the annual Labour Force Survey
The result is expressed as a number of months. For example, a CAI of 40 means it takes 40 months of the median salary (before tax and expenses) to buy a typical entry-level car.
The Index Over Time: 2010-2026
| Year | Median Monthly Salary | Typical Cat A Car Cost | CAI (Months) | Trend |
|---|---|---|---|---|
| 2010 | $3,000 | $85,000 | 28.3 | — |
| 2012 | $3,300 | $130,000 | 39.4 | ↑ |
| 2014 | $3,700 | $115,000 | 31.1 | ↓ |
| 2016 | $4,056 | $95,000 | 23.4 | ↓ |
| 2018 | $4,437 | $105,000 | 23.7 | → |
| 2020 | $4,534 | $100,000 | 22.1 | ↓ |
| 2022 | $5,070 | $155,000 | 30.6 | ↑ |
| 2023 | $5,197 | $195,000 | 37.5 | ↑ |
| 2024 | $5,500 | $180,000 | 32.7 | ↓ |
| 2025 | $5,700 | $175,000 | 30.7 | ↓ |
| 2026 Q1 | $5,850* | $173,000 | 29.6 | ↓ |
* 2026 salary is estimated based on trend. Official MOM data releases annually.
Key Findings
Cars Are More Affordable Now Than in 2023 — But Still Expensive
The CAI peaked at 37.5 months in 2023, meaning it took over 3 years of the median salary to buy a car. As of Q1 2026, it's dropped to 29.6 months — an improvement, but still above the 2016-2020 "golden era" when the index was 22-24 months.
Salary Growth Isn't Keeping Up with COE Growth
From 2016 to 2026, the median salary grew by approximately 44% (from $4,056 to $5,850). Over the same period, the cost of a typical car grew by 82% (from $95,000 to $173,000). The gap between salary growth and car cost growth is the fundamental driver of reduced affordability.
The 2016-2020 Window Was the Best in Recent Memory
With CAI values of 22-24, this period represented the most affordable car ownership in over a decade. Young buyers who purchased during this window made what turned out to be excellent financial decisions. The combination of moderate COE prices and rising salaries created a brief sweet spot.
What Drives the Index?
Two factors move the CAI:
- COE prices (dominant factor): Since COE is the largest variable cost component, COE movements drive 70-80% of CAI changes
- Salary growth (stabilizing factor): Rising salaries gradually improve affordability, but salary growth is slow (2-4% annually) while COE can swing 30-50% in a single year
This means the CAI is primarily a COE tracking metric with a salary adjustment — which is exactly the insight we want. It tells you whether a given COE price is more or less burdensome relative to earning power.
How to Use the Index
For prospective car buyers, the CAI provides useful context:
- CAI below 25: Historically affordable — consider buying if you need a car
- CAI 25-30: Average affordability — typical for recent years
- CAI 30-35: Expensive — consider waiting if possible
- CAI above 35: Very expensive — strong signal to defer purchase unless urgently needed
The current Q1 2026 value of 29.6 suggests we're in "average" territory — not a bargain, but not at crisis levels either.
Methodology Notes
This index has limitations we want to be transparent about:
- It uses the median salary, not household income. Dual-income households have roughly double the effective purchasing power
- It assumes a specific car profile (Cat A, $25,000 OMV). Category B and luxury cars would show higher ratios
- It doesn't account for loan availability. Most buyers finance 60-70% of the car, which changes the cash flow picture
- Salary data is released annually with a lag; we estimate inter-year values
Despite these limitations, the CAI provides a consistent, comparable metric over time. We publish updates quarterly on this page and on our Trends dashboard.
Frequently Asked Questions
What is a good CAI to buy a car?
Historically, a CAI below 25 has been considered affordable. The 2016-2020 period, with CAIs of 22-24, is the most recent "good" window. As of Q1 2026, we're at 29.6 — slightly above average but improving.
Will the CAI ever go back to the low 20s?
It's unlikely unless there's a significant economic downturn or the government increases vehicle quotas. The 0% growth rate and strong economic fundamentals suggest COE prices (and thus the CAI) will remain elevated.