What does Sydney's soaring vacancy rate imply?

The Real Estate Institute of New South Wales (REINSW) disclosed on Tuesday that their new research showed vacancy rates have risen across Sydney – a shift that suggests oversupply in the market.

Data from the August 2018 REINSW Vacancy Rate Survey showed that metropolitan Sydney vacancy rates were up 0.2 percentage points from July, to 3%.

Looking into specific areas, REINSW reported that vacancy rates in Middle and Outer Sydney are both at 3.1%, marking an increase of 2.0 percentage points and 4.0 percentage points, respectively, while inner Sydney saw its vacancy rates climb 2 percentage points to 2.9%

REINSW President Leanne Pilkington noted that increasing vacancy rates has been a concern in New South Wales' capital.

"We have seen a steady and relatively consistent rise in vacancy rates across Sydney as a string of developments reach completion creating an oversupply in the marketplace," she explained. "As a result, rents are falling and properties are staying longer on the market than usual."

The higher vacancy rate was clearly observed in some regions, including Hunter whose vacancy rates increased 0.1 percentage points to 1.8%, although Newcastle recorded a drop of 0.1 percentage points, coming down to 2%.

Bucking the trend was The Illawarra, which remained steady at 2%. Wollongong’s vacancy rates were also unchanged at 2%.

Also included in the study was market movements in select regional areas.

"Across regional areas, Coffs Harbour rose 0.9 percentage points to 3.8%, Central Coast increased 0.5 percentage points to 2.5% and the Riverina rose 0.3 percentage points to 3.4%. The Northern Rivers slipped 0.3 percentage points at 1%," REINSW stated in its disclosure.