Deciding to buy or rent is a personal decision and is probably tied more to timing than any other rationale. In general, homeownership is the cornerstone of good financial planning. It is better to invest in yourself than someone else.
However, in certain life circumstances, it might make more sense to rent. Some examples include:
- Your down payment, monthly mortgage and home maintenance expenses will put too much strain on your household finances;
- You do not expect to be in your current location long enough to ride out the ups and downs of the real estate market;
- You are involved in a start-up and your future income stream is uncertain;
- You have recently sold your home at a profit but you feel it isn’t the right time to reinvest in real estate;
- You are between jobs and your future income stream is unpredictable;
- You can make more money investing in another asset class like stocks, bonds, or cash.
Even if you fall into the above categories, it might still make sense to buy. So, the question is how do you decide if you should buy or rent?
A good place to start is the price-to-rent ratio, which measures the relative affordability of buying versus renting. The price-to-rent ratio equals the home value divided by its annual rent. The US property portal Trulia has set the following guide for the price-to-rent ratio:
- Price-to-rent ratio of 1 to 15 = much better to buy than rent;
- Price-to-rent ratio of 16 to 20 = typically better to rent than buy;
- Price-to-rent ratio of 21 or more = much better to rent than buy.
I strongly caution against relying too heavily on the price-to-rent ratio as your only decision point. It is just a rough guide to give you a sense of whether the overall market is favouring buying or renting. In addition, I would rephrase Trulia’s guide to:
- Price-to-rent ratio of 1 to 15 = favouring buy;
- Price-to-rent ratio of 16 or more = favouring renting.
Using the formula Sales X-Value divided by (Rent X-Value x 12), we can calculate the ratio at the national, district, HDB town, project, and unit level. (See nearby tables.)
As you can see from the graph below, today’s price-to-rent ratio for the overall HDB market is 15.5 and Private Apartments is 31. 
How you interpret these numbers ultimately depends on your circumstances and analysis. If you take the HDB ratio of 15.5 and the Trulia guide literally, you should rent rather than buy. But, 15.5 is close to 15 and many of the HDB towns fall below 15. Also, for the last nine years, the HDB price-to-rent ratio has been relatively flat, regardless of market conditions. This type of consistency and stability suggest that, overall, it is still more affordable to buy HDB than it is to rent.
In the case of private apartments, the graph is even more ambiguous. The price-to-rent ratio has increased significantly during the Cooling Measures and stands at a high of 31. The reason for this trend is that rents are coming down (as a result of increased supply and immigration policy) much quicker than prices (as a result of increased supply and Cooling Measures). According to SRX Property, as of September, rental prices for private apartments were down 13% in comparison to 6.7% for resale prices. In other words, as a result of a rebalancing that is occurring in the private apartment market, it is relatively cheaper to rent than it is to buy.
Does this mean you shouldn’t buy a private apartment? If you fall into one of the six life circumstances, it probably makes sense for you to rent. However, if you plan to stay in the private apartment for quite some time, there are several favourable conditions working to your advantage, including low interest rates, projects that are trading below X-Value, and a flat price index that suggests that Cooling Measures are losing their steam.
Also, as you can see from the nearby table, Singapore’s price-to-rent compares well with international cities in its peer group. London, Hong Kong, Paris, and New York all have higher ratios. Cities in high demand are going to have higher price-to-rent ratios than those in the doldrums (i.e., Detroit). 
Trulia’s guide covers the entire US so 15 might not be the right standard for Singapore. It might make more sense to interpret the price-to-rent basis on a relative basis (i.e., against one’s peer group) than at Trulia’s cut-off of 15.
Also, when thinking about buying versus renting, remember that what is happening at the national level is not necessarily what is happening at the local level. It behoves you to drill down into the details of each project and unit level and seek the advice of knowledgeable experts. For example, use X-Value to calculate the price-to-rent ratio for an individual home that interests you rather than relying on a nationwide or district table.
There are no hard rules for deciding whether to buy or rent. It is fun to compare price-to-rent ratios between cities, districts, and towns, but ultimately the decision to buy or rent is a very personal one. Do your research, speak with a trusted adviser, and then decide if the financials make sense given your particular circumstances.