Renting a house in some of Sydney’s most expensive neighbourhoods has become cheaper over the year as they compete with newly built apartments on the rental market.

While the median asking rent for houses across Sydney remained at $550 for six quarters in row, renters in the city and east are now paying $60 less than they were a year ago.

The median house rent in Sydney’s inner city dropped 5.5 per cent year on year to $1,040, according to the latest Domain Rental Report. On the lower north shore it dropped 4.5 per cent – or $50 – to $1050. Asking prices for apartments on the lower north shore also fell by 3.2 per cent to $600.

“It’s the first negative year on year movement for houses in the city and east since [the beginning of the data set in] 2014 ” said Domain Group data scientist Nicola Powell. “The supply is out-growing demand in that particular market”.

Prices also fell, to a lesser extent, for houses in the north west, northern beaches and upper north shore year on year. Rents pushed higher on the fringes of greater Sydney, with houses in the city’s west, Blue Mountains and Central Coast all seeing increases. They remained flat elsewhere.

For apartments, Sydney-wide asking prices were steady at $550.

The lower north shore was the only region to see rents for apartments fall over the year.

“The pace is changing for the rental market, particularly as a cooling sales market in Sydney is giving landlords less reason to increase their rents,” Dr Powell said.

“It’s definitely a renter’s market,” said LJ Hooker Lane Cove business development manager Yvette Cherry.

She said an influx of units in the Lane Cove area had put downward pressure on asking rents. Figures from the Department of Planning and Environment show multi-unit completions for the year to April were up more than 200 per cent annually.

“There are two-bedroom units everywhere, there were over 150 just in Lane Cove alone when I last checked,” she said. “For a lot of properties getting re-let, [landlords] have even had to offer price deductions.”

An influx of Sydney rental listings over the June quarter was a key factor for easing prices, with the number of houses for rent up 6.9 per cent from the previous year, and units 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,” Dr Powell said.

The resurgence of first-home buyers could be another factor weakening rental demand, but that could have been counterbalanced by the pullback of investors off the back of tighter macro-prudential settings, economist Stephen Koukoulas, of Market Economics, said.

When combined with “very strong construction levels”, it was no surprise the market had remained quite flat, he said.

He noted falling property prices meant investors who had relied on strong capital growth to get “bang for their buck”, might increasingly be deterred by Sydney’s “relatively low rental yield” and look elsewhere.

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

“Tightening credit has seen investor demand for properties falling away, while we’re still in the early stages….it could lead to some pull back in the fresh supply [of rental properties]”, Mr Koukoulas said.

However any shortage in rental stock was a long way off, with Mr Koukoulas saying there was still a lot of supply in the construction pipeline.

“My hunch is that….we could see more of a deterioration in [rental] prices.”