Sydney rental vacancy crisis: 0.9% availability in June 2025

Rental vacancy rates across Sydney have fallen to 0.9% in June, the lowest in at least five years, according to the latest data from SQM Research. That means only 2,600 properties sit empty out of a total rental stock of roughly 290,000 homes. For every available rental, an estimated 40-plus prospective tenants are now competing-pushing rents up 8.2% year-on-year to a median of $730 per week for units and $810 for houses.

Why the squeeze is hitting hardest now

The crunch comes as international migration rebounds to pre-COVID levels, adding about 35,000 new households into the Sydney market in the past 12 months alone. But the supply of new rental stock is not keeping pace. Only 5,200 new apartments were completed across the city in the 2025-26 financial year, well below the 15,000 annual target set by the NSW Government’s Housing Strategy. The result: a race for every lease that spills into open homes, where agents at Kirribilli and Crows Nest report queues around the block within hours of listings going live.

Compounding the issue is the flood of would-be first-home buyers who have been locked out of purchasing. The median house price in the Inner West hit $1.95 million in June, up 4% from a year ago, while units in the Northern Beaches now command $930,000 on average. With rates holding at 4.35% since March and banks requiring a 20% deposit for loans above $1 million, many renters simply cannot bridge the gap between what they can save and what they need for a deposit.

Where the pinch points are-and what comes next

Suburbs like Camperdown and Newtown now see vacancy rates of just 0.3%, according to Realestate.com.au’s latest suburb-level data. A two-bedroom terrace in Camperdown that went for $680 per week in January 2025 is now listed at $840 per week. A similar jump is playing out in Marrickville, where median asking rents for units rose from $580 to $660 per week in the same period.

The NSW Rental Commissioner’s office says 82% of landlords who raised rents in the June quarter cited higher mortgage repayments as their primary motivation. The tenancy advocacy group Better Renting says 41% of renters in the city are now spending more than 30% of their gross income on housing-the highest proportion since the agency began tracking in 2020.

For those looking to buy, the path is getting narrower. The Reserve Bank has held the cash rate at 4.35% for nine straight meetings, and while inflation has eased to 3.0%, lending constraints remain tight. Lenders such as Commonwealth Bank now require an assessment rate of 7.5% on all new mortgages-meaning a buyer earning the Sydney median income of $98,000 can only borrow about $560,000, far short of what’s needed for a typical first home.

The NSW Government’s shared-equity scheme, First Home Buyer Choice, has helped 2,100 households since its July 2025 expansion, but officials at the Department of Planning acknowledge it alone can’t bridge the supply gap. With 31,000 new homes still under construction across the city and completion times running 18 to 24 months, no relief is expected before early 2028.

Tenants trying to stay put are confronting annual rent increases of up to 15%-the maximum allowed under the current tenancy laws without special grounds. The Real Estate Institute of NSW advises renters to lock in longer leases-say two-year terms-where possible, and to consider moving to outer-ring suburbs such as Liverpool or Penrith, where vacancy rates hover around 2% and asking rents for units are $100 to $150 a week cheaper.

For buyers, the ANZ senior economist says the outlook for a rate cut before November is dim, meaning borrowing capacity will remain capped. Those who can should target townhouses or units in emerging corridors like Parramatta and Macquarie Park, where new supply is slated to arrive in 2027. But for now, both sides of the market are feeling the same squeeze: too many people chasing too few homes.