Up until a few years ago, Sam Losanno's garden supplies store received all-day sunlight.

But these days, from about lunchtime, a big shadow is cast over his shop.

"We always knew that the area was earmarked for development," Mr Losanno said.

"We just didn't realise how big it would get."

Key points: About 54,000 apartments built between 2018 and 2019 are about to flood the market

About 54,000 apartments built between 2018 and 2019 are about to flood the market This, combined with low buyer and tenant activity, will lead to an oversupply of units

This, combined with low buyer and tenant activity, will lead to an oversupply of units Sydney's occupancy rates are hard to quantify so the extent of the problem is unknown

About 25 kilometres north-west of Sydney's CBD, Mr Losanno's shop in suburban Carlingford sits within a 100m radius of six new multi-storey apartment developments — some as big as 21 levels — approved during Sydney's real estate boom.

Construction workers are putting the final touches on the last of the buildings, that, when finished, will create a precinct of more than 1,000 apartments in the once-sleepy suburban enclave.

There is just one thing missing.

"To be honest, I would have expected to see many, many more people around," Mr Losanno said.

"I would imagine that the occupancy levels in the buildings are average at best."

A two-bedroom apartment near Mr Losanno's shop is advertised online for $881,000. ( ABC News: Nick Sas )

In Sydney's apartment market, a perfect storm is brewing.

According to property data agency SQM Research, rental vacancy rates across Sydney hit 3.4 per cent last month — the highest level since 2005, the year it began keeping records.

Vacancy rates in The Hills district — where the Carlingford development sits — hit 5.8 per cent last month, with some parts reaching as high as 7 per cent.

Vacancies in the City of Sydney and City of Parramatta — areas with large numbers of high-density apartments — reached 5.4 per cent and 3.7 per cent respectively.

'We're at peak supply'

Data suggests 54,000 new apartments built in Sydney during 2018 and 2019 will be up for grabs by the end of the year, causing an over-supply.

My Housing Market chief economist Andrew Wilson, said it had created what was known as "a 'ghost-tower' environment".

Property analyst Andrew Wilson says a number of trends have combined to cause the ghost-tower effect. ( ABC News: Nick Sas )

"We've come through a massive apartment boom in Sydney, and now we're at peak supply," Dr Wilson said.

He said an underperforming market with a lack of buyer activity had been exacerbated by a lack of tenants.

"It's all combined to create those empty towers."

SQM Research chief executive, Louis Christopher, said another element adding to the ghost-tower scenario was that some foreign investors bought properties to keep "as a storage of value".

"It's like buying a gold bar," he said.

"They'll buy and hold and keep it shut for the whole duration of their ownership."

Mr Christopher said some investors preferred to leave their properties empty to avoid "wear and tear" and make it easier to sell them quickly when the market turned.

Apart from adding up rental vacancies, listings and anecdotal evidence from developers and real estate agents, it was difficult quantify exactly how many unoccupied apartments existed, he said.

"But we do believe there is a fairly large component — especially new apartment properties — that are simply unoccupied," Mr Christopher said.

Sydney occupancy rates 'murky'

Karl Fitzgerald is attempting to put a number on the phenomenon.

Mr Fitzgerald, a property researcher with Prosper Australia, assesses occupancy rates of apartments in Melbourne based on readings of water consumption data.

He said he was impossible to use the same methodology in Sydney, as water use was measured through whole buildings, rather than individual units.

"So there's a bit of murkiness with getting definitive occupancy levels in Sydney," he said.

Governments have attempted to address the situation.

In December 2017, the Federal Government introduced a foreign owners vacancy tax, where owners were charged a fee if their property was unoccupied or rented out for less than six months in a year.

However, that legislation affects properties bought post May 2017 — when Sydney's property boom was subsiding.

Ahead of the state election, NSW Premier Gladys Berejiklian argued that, on its own, her policy of increasing supply would help affordability and slow Sydney's runaway prices.

Karl Fitzgerald said for some people it made more economic sense to leave a property vacant, rather than sell or rent it out. ( ABC News: Gemma Hall )

But Mr Fitzgerald said developers helped control supply.

"We actually prefer to call call it 'manufactured scarcity'," he said.

"And it's done to deliver the best outcome for the developers, with little regard for the community.

"For some it makes more economic sense to keep vacant rather than rent out or put on the market."

'Powering ahead' with development

Developers have routinely denied any form of market manipulation.

Meriton, Sydney's biggest apartment builder, said ghost towers "aren't an issue".

Instead the problem was "the large tracts of developable land" which could not be improved efficiently due to "bureaucracy".

Dyldam, a western-Sydney focused developer behind some of the new blocks in Carlingford, told the ABC it was "powering ahead" with a range of developments in Sydney's west.

A spokesperson said three of its four buildings — comprising 279 apartments — in the suburb were now complete and "occupied".

Back in Carlingford, Mr Losanno's garden supplies business is much quieter these days.

"People in apartments don't really need bags of chicken manure," he said.

A postie outside the Carlingford development said it was "hard to say" how many people lived there. ( ABC News: Nick Sas )

When the ABC took a stroll around the Carlingford, a handful of people were walking about, but even the local postie was a little sceptical.

"I've been putting a lot of mail in here," he said, pointing to one of the overflowing letterboxes.

"There's definitely people in here, but how many? It's hard to say."