It’s a Renter’s Market
According to SRX Property, private apartment rents are down 12.5% since their peak in January 2013. In July, rents dropped another 0.3% even though the number of monthly transactions increased.
The market has clearly shifted in favor of renters as landlords face increasing competition (i.e., supply) and decreasing demand.
There will continue to be downward pressure on rents as long as the current market dynamics prevail.
At this point, there’s no sign that rental supply will tighten any time soon. In fact, urban planners expect more than 40,000 private flats to come on market by end of 2016. This means more rental options for renters and increased competition for landlords.
On the demand side, there are fewer renters as a result of tight immigration rules. In addition, expatriates are taking advantage of surplus supply to negotiate down rental prices or downsize to less expensive rentals.
The history of expatriate housing budgets is that employers are forced to provide lucrative packages in emerging markets to get employees to leave their home countries. The lease is put in the company’s name to protect the employee from dodgy tenant laws.
As the market evolves into a first class economy, it’s difficult for multinational companies to unravel the housing budgets because they have set a precedent for the next generation of expatriates. The employers find that they cannot cut the packages without a good excuse.
In the case of Singapore, multinationals were trying to rollback housing budgets long before the 2008 Financial Crisis, as Singapore is hardly a hardship post and the rule of law is strong.
The financial crisis gave multinational managers the good excuse to cut housing benefits in Singapore. Subscribing to the axiom “never let a good crisis go to waste,” many companies used the financial crisis to cut the lucrative housing packages and shift responsibility for housing to the expatriate employee.
Since it is wait-and-see with respect to the Government’s immigration policy, and it’s unlikely that employers will return to the pre-financial crisis go-go years of lucrative expatriate housing budgets, don’t hold your breath that rental demand will pick up in the near future.
The current dynamics has significant ramifications for landlords’ negotiating power and rental income.
The balance of power has shifted to renters. They have the upper hand in negotiations because they have plenty of other rentals from which to choose.
In a down market, renters know that they should be able to get rent at or below the X-Value.
(SRX Property’s X-Value uses computers and comparable market analysis to estimate rents for all properties in Singapore and is available from your agent or on your personalized webapp my Property Tracker at SRX.com.sg/tracker.)
Meanwhile, in a down market, landlords face the lose-lose choice of reducing the rent or leaving the rental unoccupied until the uninitiated comes along and pays full price. Both choices lead to a decline in rental income.
Anecdotal evidence from renters in recent focus groups suggest that some landlords are trying to resist market forces and rent above the X-Value.
However, these same renters commented that they later received SMS messages from the agents of these landlords telling them the rents had been lowered. It is very difficult to go against the market.
Your Money Will Rent, What?
In an effort to help market participants gain an understanding of rental costs in Singapore, SRX Property has put together two tables: one for HDB and one for Private apartments.
Each table shows what properties one can rent at various price points. 
For example, if your rental budget is $2,000 per month, you can rent a 3-room HDB in Kallang/Whampoa or Tampines or a 4-room in Sembawang or Woodlands.
If you go to the private apartment table, you will see that the same $2,000 makes you eligible for a 1-bedroom apartment up to 600 square feet in Ang Mo Kio. 
Also, for the same price, you can rent a 2-bedroom apartment up to 1,000 square feet in Pasir Ris.
Regardless of what budget affords what property in the table, today’s rental market favours the tenant in the price negotiation. It’s a renter’s market.
As a result, don’t be surprised if prices continue to fall as more supply comes into the market and more tenants negotiate lower rents.