The impact of the Sydney building boom is now being felt in the rental market, with the city’s apartment rents falling for the first time in three years, new data shows.

In a sobering sign for investors, agents in some high-density areas are now discounting properties to compete with the new stock coming on.

The median weekly asking apartment rent dropped 2 per cent from $510 to $500 over the December quarter, the latest Domain Rental Report shows.

“This is the first sign that the record new supply from the high-rise boom is impacting the rental market,” Domain Group senior economist Andrew Wilson said.

“Supply is beginning to exceed demand and it’s a little bit of a warning for investors that we may see further reductions in rent,” he said.

Sydney house rents flatlined over the quarter at $530 a week, up a modest 1.9 per cent year-on-year.

Ryde landlord Pim Charoensuk said the influx of new units had created a “very different” market to a year ago.

At the start of 2015 she had her two-bedroom apartment at 3120/90 Belmore Street rented out at $560 a week. By late 2015 she couldn’t find anyone willing to pay that price. .

She dropped the rent to $520 and managed to secure a tenant but, given the lower return, is now thinking about selling the unit.

This unit at 3120/90 Belmore Street, Ryde required a $40 a week rent discount to find a tenant. Photo: Supplied

Just Think Real Estate’s Edwin Almeida believes unit rents in some parts of Sydney will fall significantly this year.

He’s started discounting the rent on apartments in Parramatta, the Hills District and Blacktown to ensure they remain competitive.

A recent report from real estate management firm JLL predicted as many as 61,000 new apartments would be completed between 2015 and 2017, compared to 44,500 between 2012 and 2014.

“Why would a tenant pay $520 a week for an old apartment when they can rent one for $520 a week that’s brand new?” Mr Almeida said.

A 2015 survey of apartment developments by analysis company Big Datr​ found Ryde, Parramatta, Baulkham Hills, Kellyville and North Sydney among the top 20 suburbs for the highest number of projects advertised.

Starr Partners chief executive Doug Driscoll said high-density areas, such as Waterloo, have reached “saturation point” with apartment supply.

“The reality is that where there are places with a million-and-one apartments, there’s clearly an abundance of choice so people can be more selective,” Mr Driscoll said.

Not all landlords are feeling the pinch, with some inner-city areas still in high demand.

Pyrmont-based Raine & Horne City Living senior property manager Carol Fung had seen solid competition for the 450 properties on their rent roll.

She says the professional demographic happily pay as much a $900 a week to secure a rental close to the CBD and surrounding amenities.

“Over the last 12 months, the three-bedroom apartment market has been very strong, with increases of 10 to 15 per cent [in the advertised rent],” she said.

Ken Sharpe from Century 21 City Quarter agreed the city market was still robust but said, “There is without doubt a large supply of apartment stock coming into the market around many of the main transport hubs.”