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Photographer: Darren Soh/Bloomberg Photographer: Darren Soh/Bloomberg

Singapore is unlikely to ease property cooling measures as it heads into a high-stakes election that could take place in the first half of next year.

Although several developers, including second-largest City Developments Ltd., have called upon the government to loosen curbs to help fix an apartment glut, such a move could cost the ruling People’s Action Party votes. Relaxing property curbs risks sending prices spiraling, making it more costly for Singaporeans to own private apartments, analysts say.

The city-state is grappling with a housing oversupply that could take as long as four years to clear. There are almost 32,000 units -- some finished, others under construction -- in the pipeline. While home prices dropped after the latest round of cooling measures were imposed in July 2018, they’ve rebounded in recent quarters.

Relaxing curbs is “likely to be unpopular ahead of the upcoming general elections and could potentially spike up prices amid volatile market conditions in neighboring countries,” said Vijay Natarajan, an analyst at RHB Research Institute Singapore Pte. “Any pre-election goodies are likely to be focused on the public housing segment where the government has already announced enhanced grants to support resale market prices.”

Read more: Singapore Property Glut: Developer Calls for Easing of Curbs

Most people in Singapore live in government-sponsored Housing Development Board flats. Upgrading to an apartment in a private condominium is often seen as a desirable step because of the units’ higher value and better facilities.

Singapore’s next elections are crucial for the PAP, which is facing a transition of power. Prime Minister Lee Hsien Loong, who has called upon his party to be prepared for a tough fight, is expected to pass the leadership mantle to his deputy, Finance Minister Heng Swee Keat.

Although elections are due by April 2021, they could be called as early as March after the government unveils its budget in February. The PAP, which has governed Singapore since independence in 1965 and is one of the world’s longest-serving ruling parties, is expected to win the impending elections. It secured almost 70% of the votes in the last elections in 2015.

Even if the PAP were to make a negligible tweak by lowering the additional buyer’s stamp duty developers must pay from 25% to 20%, there could be a backlash.

“The opposition may simply say that the government is helping developers by lowering the ABSD and all sorts of well-sounding arguments will crop up online,” said Alan Cheong, a senior director at Savills Plc. “The best thing is to just get the election over and come back down to making rational decisions.”

Other factors such as macroeconomic conditions could also play a more important role than politics in deciding whether to relax property curbs, said Christine Sun, the head of research and consultancy at OrangeTee & Tie Pte.

Sun said the government seems satisfied with the current pace of price increases while buoyant sales should help absorb the unsold units. “It’s unlikely they’ll want to change things too drastically now,” she said.

Regardless, cooling measures should be recalibrated at some point, Cheong said. What’s preventing a smooth functioning market is developers’ inability to sell larger units, he said. Stamp duties for Singaporeans and foreign buyers could be tweaked, while developers’ levies should be tiered according to the size of their projects, he added.

“Whether they will tweak or not is their prerogative, however we feel that whenever measures are implemented, a feedback and action loop must be in place,” Cheong said.