The Sydney vacancy rate has hit its lowest level since March 2012, according to data from the Real Estate Institute of NSW (REINSW).
Residential rental vacancies across Sydney declined by 0.1 per cent in November, to a low of 1.6 per cent.
REINSW president Malcolm Gunning said an undersupply of new housing might explain the drop.
“The rising population and lack of new housing developments is fuelling this shortage,” Mr Gunning said.
The biggest decrease came in the outer suburbs, which saw vacancies decline by 0.4 per cent to 1.3 per cent.
The inner suburbs dropped by 0.1 per cent, while the middle suburbs saw a 0.2 per cent rise, up to 1.8 per cent.
Elsewhere in New South Wales, vacancy rates returned mixed results.
Rates fell in Illawarra and Wollongong, with results of 1.8 per cent and 2.2 per cent respectively.
Newcastle, however, saw a rise of 0.5 per cent to a high of 2.9 per cent.
The most vacancies were found in the central west and south eastern NSW, with rates around four per cent.