Almost one in six rental properties in Sydney's CBD (16.2%) were vacant in May.
Sydney's residential vacancy rate is now the highest in the country and the highest on record since 2005, according to SQM research, rising to 4% in May.
There are now over 29,416 rental properties sitting empty across Sydney - the result of a decline in international students and holidaymakers with Airbnb rentals becoming available on longer-term leases.
Melbourne's vacancy rate also increased to 3.1% in May, while Canberra jumped by 0.1% to 1.3%.
Despite the spike in vacancy rates in Sydney and Melbourne, the national vacancy rate has actually slipped.
The national vacancy rate fell marginally from 2.6% in April to 2.5% in May.
Adelaide (1.2%), Hobart (1.2%) and Brisbane (2.5%) dragged down the national vacancy rate.
See also: Should you find a new place to rent during COVID-19?
SQM Managing Director Louis Christopher said we may now be hitting a short-term peak in vacancies.
"Weekly rental listings suggest a slight decline in supply for the first half of June. I think what is happening here is AirBnb property owners have now pulled back from listing long term and are now waiting this time out in the hope that the borders will be open shortly," Mr Christopher said.
"However, with an expected 170,000 dwelling completions for this year and still no imminent opening of the international border, I still think rental vacancy rates are going to remain elevated for 2020.
"While First Home buyer grants may assist in soaking up some of the new supply, let's just remember the bulk of underlying demand growth in recent years has come from net migration. Also note that many first home buyers are tenants."
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