Rental vacancies in Sydney dropped below 3 per cent for the first time since November 2018 last month, according to the Real Estate Institute of New South Wales.

The September REINSW Residential Vacancy Rate Report reveals vacancies dropped 0.7 per cent from August to 2.9 per cent - their lowest rate this year.

According to the report, Middle Sydney saw the biggest drop of 0.9 per cent compared to August, followed by Outer Sydney (down 0.8 per cent) and Inner Sydney (down 0.3 per cent).

Chatswood, Auburn and Arndell park experienced the largest decrease in vacancies, while Neutral Bay, North Sydney, Denistone, Forestville and Kurrajong all experienced vacancy rates in excess of 5 per cent.

REINSW CEO Tim McKibbin told WILLIAMS MEDIA while he couldn't say what was driving the reduction in the available rental supply, the population was increasing each year.

"We know from previous reports put out over the years that we are not creating enough dwelling to accommodate our increasing population," he said.

“It is for that reason that we are seeing continued pressure on rents."

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Source: REINSW

Hunter data

The rental vacancy trend in the Hunter mirrored that of the Sydney region during September, with rates down to just 1 per cent - a low that hasn’t been seen since before REINSW started collecting vacancy data in April 2016.

In Newcastle, rates are down to 1.2 per cent from 1.5 per cent, while other regions in the Hunter are down to 1 per cent from 1.4 per cent.

Illawarra data

Total vacancies in the Illawarra decreased to 2.2 per cent down from 2.3 per cent.

While most of the Illawarra experienced a dive in vacancies, Wollongong climbed for a second month. The number of unoccupied properties in the coastal city is now at 2.8 per cent, a 1.2 per cent jump since July.

185-macquarie-street-sydney-1-263814ff-d116-4fe9-9d67-014e7ef0d746.jpg

185 Macquarie Street, Sydney. Available for sale through Morton. As seen on Luxury List.

Other regional NSW areas

More than 50 per cent of the other regions also experienced a decrease in vacancies.

The South Eastern region experienced the most dramatic drop, down from 4.1 per cent to 1.2 per cent. The Northern Rivers also saw a large fall from 2.1 per cent to 1.6 per cent.

At the other end of the spectrum was Coffs Harbour, which saw a vacancy increase of 1.6 per cent, up from 1.3 per cent to 2.9 per cent.

The REINSW Residential Vacancy Rate Report is based on the proportion of unlet residential dwellings to the total rent roll of REINSW member agents on the 15th of each month.  

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