Rental vacancy rates across NSW have dropped even further, with Sydney recording its lowest rate in 12 months, Real Estate Institute figures show.

The Hunter, Central Coast, Sydney and the Illawarra have fewer rental properties available, new monthly figures from the Real Estate Institute of New South Wales (REINSW) show.

Sydney’s vacancy rate dropped from 1.5 per cent in April to 1.0 per cent in May.

“This is the lowest result recorded since May last year and is extremely disappointing,” REINSW president Steven Martin said in a statement.

Over the same period, available rentals dropped in the Illawarra from 1.9 per cent to 1.6 per cent.

In the Hunter, rates fell by 20 basis points to 1.7 per cent.

Mr Martin said first-time home buyer grants and record low interest rates had not boosted rental vacancies.

“These results are a double-edged sword – great news for landlords but grim news for tenants,” he said.