The record 19,572 properties currently vacant — 2.8 per cent of all Sydney’s rental housing — has also meant landlords have had to offer competitive rents to secure tenants.
Sydney was the only city to record a drop in average advertised rent over the past year, with typical prices falling 2.2 per cent.
Average asking rents also fell 0.8 per cent in the past month alone, the SQM Research showed.
SQM Research director Louis Christopher said the rental falls and higher vacancies went “beyond seasonal factors”.
The glut of empty properties was the result of a surge in building completions and a slowdown in population growth driven by high interstate migration to Queensland, Mr Christopher said.
“There is now a greater supply of rental accommodation at a time when the growth in rental demand is probably falling,” he said.
“Its likely rents will continue to slip as there is still a lot of supply coming in the pipeline.”
Pressure on landlords to cut rents remained the greatest in city regions heavily supplied with new housing.
This included Hills District suburb Kellyville, where 7 per cent of rentals were currently without a tenant, and additional CoreLogic data showed weekly unit rents dropped an average of $48, or 8 per cent, for the year.
In the Hills as a whole — where a slew of housing projects have been released for the opening of the Sydney Metro Norwest rail line next year — the vacancy rate was an unusually high 4.9 per cent.
This helped push typical weekly rents down $82, or 12.2 per cent, in local suburb Box Hill and by about $20 in nearby Beaumont Hills and Castle Hill.
The lower north shore had a similarly high vacancy rate of 4.1 per cent — based on the number of online rental listings still advertised after more than three weeks.
Rental falls in that region were led by the suburb of Castle Cove, where typical weekly rents dropped 21.1 per cent, or $240, followed by Cremorne with a drop of 15.9 per cent, or $213.
Landlords would need to adjust to the changed climate, Mr Christopher said.
“For landlords, now is not the time to lift the rent, especially on a good tenant,” he said. “Renters are in a good position now. Particularly in the middle and top end of the housing market. They should consider haggling.”