The Sydney rental market has recorded its highest vacancy rate in more than a decade, with almost 20,000 rental properties estimated to be sitting empty.

The city’s residential vacancy rate rose to 2.8 per cent in June, its highest rate in at least 13 years according to the latest data from property analysis firm SQM Research.

An estimated 19,572 residential rental dwellings are estimated to be sitting vacant and available for rent.

The vacancy rate is up from 2.5 per cent in May and 2 per cent the previous June. It’s also the highest rate seen since SQM started recording the data in 2005.

An increase in rental stock off the back of the building boom and potentially a mild slowdown in population growth are factors behind Sydney’s rising vacancy rate, SQM managing director Louis Christopher said.

“There is now a greater supply of rental accommodation at a time when the growth in rental demand is probably falling a little,” Mr Christopher said.

“I believe Sydney will shortly record a fall in its population growth rate due to a relatively recent steep rise in interstate migration towards Queensland.”

Across Sydney the Hill District recorded the highest vacancy rate, with 4.9 per cent of rental properties sitting empty over June.

While it’s bad news for landlords, it’s good news for renters, according to property manager Anthony Cachia of Ray White Nolan & Iken, who says they face less competition.

“There’s still a lot of people out there looking, but they’ve got a lot more choice now. Instead of having 10 people looking at one property we’re having most often one or two that come through,” Mr Cachia said.

He noted about half of landlords were reducing asking prices to get ahead of the competition, which has increased due to the “sheer scale of development” in the area in recent years.

“A lot of the properties are still leasing, they’re just taking a bit longer, that extra week or two, some others longer,” he said.

The Hills District was followed by the lower north shore and upper north shore, which recorded vacancy rates of 4.1 and 3.6 per cent respectively.

The lowest vacancy rates across Sydney were in the city’s south, with St George and south western Sydney recording a rate of 2.1 per cent.

However, even there, properties are taking longer to rent out than they used to, according to St George Property Agents principal Michael Stojanovic.

“There are a lot of properties out there compared to eight or nine months ago,” he said. “Most of the time it takes a couple of weeks [to rent out a property], when once it would have taken a few days.”

He noted affordability was a big driver for higher demand in the region.

“A lot is getting built around here and I really thought it was going to flood the market, but the units are actually more popular, as they’re more affordable.”

While Sydney’s vacancy rate is the highest recorded by SQM it still falls below that of Brisbane, which is at 3 per cent, Perth at 4.1 per cent and Darwin, which has risen to 3.5 per cent.

Melbourne and Adelaide have vacancy rates below 2 per cent, while less than 1 per cent of rental properties were empty in Canberra and Hobart.

The report noted that while it was typical for capital cities to see a rise in rental vacancies during winter, the jump in Sydney’s vacancy rate went beyond seasonal factors.

Mr Christopher also predicted that Sydney rents would likely slip as more housing supply came through the construction pipeline.

Sydney’s median asking rent for houses and apartments remained flat – at $550 – for the 12 months to June, according to the recently released Domain Rental Report.

However in some of Sydney’s most expensive neighbourhoods – the city and east and lower north shore – renting has become cheaper over the year, due to increased rental stock off the back of the building boom.

Over the June quarter the number of houses for rent in Sydney increased 6.9 per cent from the previous year, and units were up 16.4 per cent – their biggest annual increase since 2012.

“We’re seeing building completions peak and seeing a lot of off-the-plan properties sold to investors [in previous years] coming onto the rental market,” Domain Group data scientist Dr Nicola Powell said.

Sydney’s rental yields also remained relatively flat year on year at 3.15 per cent for houses and 3.85 per cent for apartments, Domain Group data shows.