In the past 12 months, the city’s supply of properties for sale fell by 17 per cent to a six-year low of 20,080 listings.
Director of SQM Research Louis Christopher said this trend could push prices in the capital even higher.
“Over the course of early 2009 through to early 2010, Sydney house prices rose by 19.6 per cent. Sydney real estate listings were higher at that time than they are now,” Mr Christopher said.
“This is one of the primary pieces of evidence as to why we have been so bullish in the Sydney market for this year.”
Melbourne also saw a fall in listings over the past year, with a 5.4 per cent drop in available properties.
There are now 39,740 homes for sale in the Melbourne market, down from 42,023 last year.
In the other capitals, Adelaide listings fell by 4.6 per cent, while Perth had 1.2 per cent fewer properties on the market.
Darwin, on the other hand, saw listings rise by 23 per cent.
Mr Christopher said this sharp increase could signal a slowing of the Darwin housing market.
Brisbane and Canberra saw more modest increases of 1.3 per cent and 0.1 per cent respectively.