Why Sydney’s Vacancy Rates Are So Low and What It Means for Renters

Key Takeaways: 

1. Sydney Vacancy Rates Hit Record Lows in 2025
   Vacancy rates in Sydney stand at 1.3%, well below the healthy range of 3–3.5%, showing intense rental demand and limited housing availability.
2. Population Growth and Supply Delays Drive the Crunch
   A growing population, migration inflows, and construction delays have created a major rental shortage across Sydney suburbs.
3. Rising Rents Impact Affordability
   With median unit rents at $750 per week, renters face growing pressure – especially students and families seeking budget-friendly housing.
4. Renters Must Adapt to a Tight Market
   To find affordable rentals in Sydney, expand your search areas, track listings closely, and prepare documents to improve approval chances.

Read Time: 6-7 minutes

A key parameter for testing a market’s efficacy is understanding its vacancy rate. According to SQM Research, as of September 2025, the vacancy rate for Sydney stood at a slim 1.3%, demonstrating a considerably high demand amongst renters in the city. 

This has also led to skyrocketing rental prices, with the Sydney Morning Herald reporting that the median asking rent for a unit in the city now costs renters $750 a week, an increase of $35 over the year to September. 

How does this impact renters, and what does this spell for the future of the market? This blog will delve into Sydney vacancy rates, the rental market, the causes and consequences of these vacancy rates and practical steps for renters to take.

What Are Sydney’s Vacancy Rates?

Before diving into the Sydney vacancy rates, it is important to understand the math that goes behind calculating them. Typically, vacancy rates are calculated through a very simple formula:

The number of vacant units is divided by the total number of units, with the result being multiplied by 100 to obtain the final percentage. 

Sydney rental vacancy rates stand at 1.3% in September 2025, one of the lowest rates this year. Industry standards maintain that a healthy vacancy rate is usually pegged between 3% and 3.5%. In contrast, the rate at which new properties are being constructed is rather slow. According to the Australian Property Investor Magazine, in certain areas across Sydney, less than 60% of unit approvals have resulted in project completion. 

Those looking to find a suitable property in the Sydney rental market must understand subtle differences within the vacancy rates as well, especially between a unit and a house. While both kinds of properties are highly sought-after by both investors, homebuyers and renters, houses see a higher demand from long-time investors due to their capital appreciation potential, while units are often bought by first-time investors who wish to enter the real estate market. 

Why Are Vacancy Rates So Low in Sydney?

So, why have Sydney vacancy rates reduced so drastically this quarter? The reasons for this are multifold, ranging from a growing population to limited real estate supply. Let’s dive in deeper. 

High Demand and Population Growth

Despite the COVID-19 pandemic and a global economic slowdown, Sydney has witnessed a steady surge of migrants. Data from Macrotrends shows that in 2020, when Sydney’s population was 4,926,000, in 2025, it had increased to 5,249,000 people. 

From international students to skilled workers, Sydney’s growing population largely consists of migrants from other countries. This exponential rise also impacted the market post-pandemic. A March 2025 article on ABC News revealed that combined regional areas in Australia witnessed home values rise by about 56.3% since March 2020, while capital cities witnessed the rise by just about 33.6%.

Additionally, the dwelling values in Sydney rose by 1.1% through the June 2025 quarter, adding just over $13,000 to the median value. However, a Paris Financial Report also noted an easing in rental growth, with the annual change in Sydney rents reducing to 1.9% from 2023/2024’s rate of 7.4%.

Limited Supply & Development Lag 

One of the major factors impacting the Sydney vacancy rate 2025 is not only the limited housing supply, but also considerable delays in development. The lag also has a lot to do with the volatile year faced by the construction industry last year, wherein nearly 3,000 insolvencies happened, particularly among small subcontractors and suppliers. 

Couple this with rising building costs detailed by Economist Damon Roast, wherein he noted that across Australia, building costs will rise between 4.5% and 6% in 2025. The Access Group also factors in things such as project delays that have impacted 74% of Australian builders and 62% developers. These delays stem from issues including financial pressures, material costs and regulatory compliance. Lags in development inevitably lead to a housing supply crunch. 

Investor Market Pressure 

Investor market pressure is a relatively unknown factor in impacting Sydney vacancy rates. Many investors are holding off-plan properties that are currently under construction in hopes of capitalising on the property’s value appreciation upon completion. 

Simultaneously, there is a boom in short-term leasing in Sydney, given the tourism boom of over 11 million visitors across Australia in 2024. Data shows that short-term rental listings in Sydney grew by 5.6% from 2023-2024, with 152,626 listings; during 2025, the number is 161,296.

This also causes a rental shortage in Sydney, particularly for renters who are looking for long-term leases. 

Rental Shortage Effects

What does a rental shortage in Sydney mean for renters? The first and most obvious result will be a rise in rent. In the September quarter of 2025, the median weekly rent for a Sydney house was $780, while the same for a unit was $750.

The rental shortage in Sydney could also strain the lagging infrastructure and development projects, which have been greenlit by the government and various authorities. 

How Low Vacancy Rates Affect Renters

A lower Sydney rental vacancy rate may impact you as a renter in more ways than you may realise. 

While high-priced areas continue to increase rents, this also impacts Sydney’s affordable rentals, which are often sought by renters who need budget-friendly options. With the median rental asking price for a house in Sydney touching $780 per week in September, this not only reflects rental shortages but also has a detrimental impact on first-time renters, families and students. 

Affordable Rentals in Sydney

While many people choose to go further into the suburbs for affordable housing, or even change cities, these are not options for everyone. To improve your scope in finding affordable rentals in Sydney, here are some tips:

• Keep tabs on listings: Like all property markets, Sydney’s property market is not immune to fluctuations. There may be times when a particular listing decreases its rental asking. Keep tabs and be patient. 
• Broaden your search: For affordable rentals in Sydney, broaden your search to suburbs that are away from the city centre, as there are several areas in Sydney that are considerably more affordable. And many suburbs also have connectivity in the form of buses and trains. 
• Prepare: You won’t be the only applicant for a particular property in the Sydney rental market. Prepare your documents beforehand so you can hand them to the owner, dress appropriately during a property visit, show references if possible, and make a good impression for your affordable rental in Sydney.

Practical Tips for Renters in a Tight Market

1. Expand Search Area — consider outer suburbs, growth corridors.

2. Be Prepared — have references, financial documents ready.

3. Use a Sydney Buyers Agent

FAQ

What is the current vacancy rate in Sydney 2025?

The current Sydney rental vacancy rate is 1.3%.

Why are vacancy rates so low in Sydney?

Sydney vacancy rates are low in Sydney due to a growing population, owed to the influx of migrants and skilled workers, and a shortage of available housing. 

How does low vacancy affect rent prices?

Low vacancy rates impact affordable rentals in Sydney and cause prices to shoot up considerably. 

Where can I find affordable rentals in Sydney?

Areas for affordable rentals in Sydney include Minto, Blacktown, Ultimo, Penrith and Parramatta. 

How can renters improve their chances of securing a property?

Renters can improve their chances of securing a property by monitoring property listings, keeping all their documents and references in hand and broadening their scope of search to newer areas.

References 

[1] – SQMResearch.com.au – Sydney vacancy rate chart

[2] – MacroTrends.net – Sydney population data

[3] – ABC.net.au – Charts show how the housing market has changed since COVID

[4] – ParisFinancial.com.au – Australian housing market update

[5] – TheAccessGroup.com – Australian construction industry outlook 2025

[6] – PriceLabs.co – Australia Airbnb market trends

[7] – Apimagazine.com.au – Don’t expect a deluge of new homes to bring property prices down