Rental accommodation in outer and inner Sydney suburbs continues to plummet, prompting renewed calls for banks to pass on the latest cut in official interest rates.

The Real Estate Institute of NSW says the percentage of available properties for rent in suburbs more than 25 kilometres from Sydney’s CBD fell from 1.1 per cent in February to 0.9 per cent in March - the lowest result recorded since June 2008.

Overall Sydney rental vacancies fell by 0.1 per cent to 1.2 per cent, the lowest recorded since October last year.

“While a tight rental market is good news for landlords, for prospective tenants the results are bleak,” institute president Steve Martin said in a statement.

For there to be sustained improvement in rental accommodation availability, he said more investors were needed in the market.

“That goal isn’t made any easier when the banks refuse to pass on interest rate cuts, no matter how small,” he said.

In inner city suburbs, a radius which extends 10km from Sydney’s CBD, rental accommodation decreased by 0.1 per cent to 1.2 per cent in March.

Middle suburbs - those located ten to 25km from Sydney’s CBD, saw slight increases in the amount of rental accommodation available, rising from 1.3 per cent in February to 1.5 per cent in March.

In the Hunter region, 1.9 per cent of properties were available for lease in March, up from 1.7 per cent in February.

In the Illawarra, overall vacancies rose 0.1 per cent to 2.0 per cent, while in Wollongong the percentage of available properties rose just 0.1 per cent to 1.6 per cent.

Mr Martin said while the federal government had given significant assistance to the major banking institutions to cope with the economic crisis, it was “time for the banks to do the right thing and put Australians before profits and immediately pass on the latest interest rate cuts to investors”.

AAP