Sydney’s vacancy rate increased slightly over May, but some of the city’s property markets are showing early stages of an oversupply issue after years of a building boom, data shows.

While Sydney had an apartment vacancy rate increase of 0.2 per cent to 2.2 per cent over the month, Parramatta’s vacancy rate jumped 0.4 per cent to 2.4 per cent, Domain Group senior economist Andrew Wilson said.

Parramatta also had the highest total vacancies of any suburb and 156 apartments were empty in May.

“It’s a big rise in the vacancy rate over just a month, but really it’s no surprise given the extraordinary level of development there,” said Domain Group chief economist Dr Andrew Wilson.

“We’ve still got the bulk [of apartment completions] to come onto the market. Numbers are accelerating rather than decelerating with a lot left in the pipeline.”

But there would not be a Sydney-wide oversupply problem, he said, just “pockets” of the city facing the issue.

Provided the rest of the city remained under supplied, tenants would eventually move into oversupplied areas to get cheaper rates of rent, he said.

About 61,000 new apartments would have been completed across the city in 2015 to 2017, compared with 44,500 in 2012 to 2014, JLL research showed. Parramatta’s share of the apartment development to date was expected to continue to creep up to that of Sydney LGA.

And it was likely the rate would rise until it hit 3.5 per cent to 4 per cent within the next few months, Parramatta-based Just Think Real Estate agent Edwin Almeida said.

He said the apartment oversupply was “more widespread” than just Parramatta and there would be pain ahead for investors in Homebush West, Campsie, Bexley and Hurstville.

“Rent is coming down slowly and landlords who don’t decrease their rent will stay on the market for longer,” he said.

However, while Parramatta might “need to be careful down the track”, there was no oversupply at the moment, Chris Johnson, chief executive of developer lobby Urban Taskforce, said.

“There has been a bit of a generational shift, making Parramatta a very desirable place to live and work, which has led to a lot of apartment buildings being proposed and built … [including] up to 90 storeys,” he said.

“It’s a positive, bold statement of the future aspirations of Parramatta and there’s a light rail coming out of Parramatta, some government departments are moving their offices there and the relocation of the Powerhouse Museum … it’s is all making it a buzzy urban centre,” he said.

In November 2015, 8000 apartments were announced for the Parramatta River corridor.

And there were more homes in the pipeline for NSW as the Housing Industry Association’s state outlook pointed to high levels of residential building activity under way and yet to begin.

Over 2015/2016, new dwelling stats were likely to increase 7.6 per cent across the state, HIA executive director NSW David Bare said.

Following that, there would be an expected 9.9 per cent decline in 2016/2017 and an expected drop the year after.

“While residential building activity may be at the peak of the cycle, it’s important not to lose sight of the bigger picture,” Mr Bare said. “Ensuring supply meets underlying demand over the long term is critical to housing a growing NSW population and improving housing affordability.