Declining residential rental vacancy rate in Sydney and Melbourne is good news for property investors but not so good for renters. In Sydney... The Real Estate Institute of NSW president, Rowen Kelly, says the latest REI vacancy-rate survey shows the total vacancy rate for Sydney was down from 2.8 per cent in September to 2.4 per cent in October. The vacancy rate for inner Sydney was 2.4 per cent. Middle Sydney fell from 2.3 per cent to 2.2 per cent, while outer Sydney fell from 2.8 per cent to 2.4 per cent. "Low vacancy rates mean increasing rents, with improving returns for investors," Kelly says. "The continuing undersupply of rental property is due to a fall in the number of people buying residential houses and apartments for investment purposes, coupled with the increasing population." Kelly called on the State Government to review obstacles that create this undersupply. "There is growing evidence that the State Government should take action now to avoid a looming rental-property crisis," he says. There are 750,000 rental properties in NSW, which provide accommodation for one third of the state's population. "Compared to other investment options such as shares or bonds, residential property offers the certainty of bricks and mortar and solid growth over the long term, with improving returns. "The Housing Industry Association has estimated Sydney will run out of available rental property within 18 months and says that councils should improve their approvals processes for new developments to ease this looming problem." A low level of investment in residential property and a slow and expensive approval process would add further to the likelihood of a rental crisis. "The NSW property sector provides more than 40 per cent of all State Government revenues so it's clear the economic fundamentals underpinning property must be effectively managed," Kelly says. The chronic undersupply of dwellings in the Sydney region is a result of increased red tape for developers and project-establishment costs, coupled with the State Government's flawed land-release schedule. Kelly says the Iemma Government should oversee the implementation of effective local government planning controls that would help boost the state's flagging economy. By Real Estate Institute of NSW