Vacancies across Sydney's suburbs continued to increase in July. It appears, however, that this uptick is now being driven by outer suburbs as the conditions in the inner ring start to tighten.

Vacancies in Sydney increased for the fifth consecutive month to 5%, according to the latest figures from the Real Estate Institute of New South Wales (REINSW). The spike in vacancies came from the outer-city suburbs.

The vacancy rate had been steadily trending downward since March in the outer-city region, as inner-city tenants let go properties with higher weekly rents for more affordable options. Vacancies in the outer-city region, however, unexpectedly jumped from 2.6% to 4.3% in July.

Middle-ring suburbs also recorded an increase in vacancy rate, up from 5.2% to 5.4%.

"This month’s results show that COVID-19 is having a significant impact across the whole of New South Wales and it’s unlikely that things will settle for a while yet,” said Tim McKibbin, CEO of REINSW.

On the other hand, the rental market conditions in the inner-city ring started to tighten, as the exodus of people from the region has eased during the month. In fact, the region's vacancy rate dropped from 5.8% to 5.3%.

Most regions in New South Wales also reported decreases in vacancies. Only Albury and the Murrumbidgee region bucked the trend and recorded higher vacancy rates in the month.

The graph below shows the movement of vacancy rates in Sydney since August 2019. Next to the graph is a table that shows the latest vacancy rates in New South Wales regional cities:

vacancy rates in Sydney

regional vacancy rates in NSW