The rental property market in Sydney has stagnated, the Real Estate Institute of NSW (REINSW) says.

Figures published on Tuesday show the number of vacant rental properties across the city and in Newcastle remained stable at 1.3 per cent in September despite incentives designed to encourage people to buy homes.

The number of vacant rental properties in Sydney’s inner suburbs fell only very slightly to 1.4 per cent while the number in outer suburbs rose by 0.1 per cent to one per cent.

In the Hunter Valley rental vacancies fell 0.1 per cent to 1.5 per cent.

In the Illawarra, overall vacancies rose 0.4 per cent to 1.7 per cent while in Wollongong, the percentage of available properties increased 0.3 per cent to 1.6 per cent.

“These results are a double-edged sword; great news for landlords but grim news for tenants,” REINSW president Steve Martin said in a statement.

“The results for Sydney and Newcastle are concerning and show that despite a low interest rate environment and additional first home buyer and other buyer incentives, the rental market remains extremely fragile.”

Mr Martin said the situation is unlikely to change in the near future.

AAP