According to the latest REINSW Vacancy Rate Survey for May 2025, Sydney’s overall vacancy rate rose marginally by 0.1 per cent to reach 1.7 per cent, still well below what experts consider a balanced market.
While Sydney’s Inner Ring maintained a stable 2 per cent vacancy rate, the Middle Ring increased to 1.4 per cent, up by 0.3 per cent, and the Outer Ring decreased slightly to 1.6 per cent, down by 0.1 per cent.
Regional areas across New South Wales are experiencing similarly tight conditions. The Hunter region saw a slight increase to 1.7 per cent, while the Illawarra region rose to 2.0 per cent.
Many other regional markets recorded even more concerning drops in vacancy rates, with Coffs Harbour, New England, Northern Rivers, Riverina, South Coast, and South East all seeing decreases.
Only the Central Coast, Mid-North Coast, Murrumbidgee, and Orana areas showed minor improvements.
REINSW CEO Tim McKibbin said he had serious concerns about the market’s trajectory, particularly in light of recent rental reforms.
“The fact that we’ve not seen any real improvement in vacancy rates in New South Wales over the last few years is a real concern,” Mr McKibbin said.
The implementation of new rental reforms has added another layer of uncertainty to an already strained market.
Industry professionals are reporting that many landlords are contemplating exiting the market in favour of alternative investment opportunities.
Mr McKibbin said that feedback from REINSW members indicates a potential exodus of property investors that could further exacerbate the rental crisis.
“So many REINSW members are telling us that landlords are considering whether they will exit the market in favour of other investment options – and the recent rental reforms will certainly do nothing to stem this flow,” he said.
The persistent low vacancy rates highlight the structural issues within the residential rental market that have remained unresolved for years.
With vacancy consistently below 2.0 per cent in Sydney, tenants continue to face limited options and increasing competition for available properties.
The new rental reforms, designed to provide additional protections for tenants, may have unintended consequences if they accelerate the departure of property investors from the market Mr McKibbin said..
“Something needs to change,” he said.
“This month’s vacancy rates continue to highlight that the residential rental market is in crisis – and with the latest rental reforms now in effect, the worst may be yet to come as landlords decide whether to exit the market.”
