Fire crews are monitoring a building site where the ground caved in on Tuesday morning, four metres from a neighbouring unit block.
Images show the ground has fallen in several metres on the building site on Frazer Street in Collaroy, while a driveway has also collapsed.
A Fire and Rescue NSW spokesman said a gas pipe had also ruptured, but crews had stopped the leak.
Residents raised the alarm at 5am on Tuesday when the ground caved in after several days of heavy rain.
The Fire and Rescue NSW spokesman said crews at the scene were faced with a difficult task.
"It's a large building site, and the building hasn't been completed yet," he said.
Fire and Rescue superintendent Kel McNamara said there were no immediate concerns about a further collapse.
Nobody had been evacuated from the adjacent apartment block, but residents' cars had been removed from garages as a precaution.
"The engineer has told us that at this stage there is no threat," Mr McNamara said.
The fire department's urban search and rescue team had set up a laser system to monitor any movement of a wall on the building site, Mr McNamara said.
"We've had significant weather over the last 24 to 48 hours and being the type of landscape that we're on, the hole's filling up with water," Mr McNamara said.
"At the moment the best thing that can happen is that the rain stops."
Wendy Hill, whose neighbouring residence overlooks the work site on its southern side, alerted authorities to the collapse.
"At five o'clock this morning we heard this massive crash and I knew, then, that something had happened," she said.
"We came out here [to the balcony] and we could smell gas."
Ms Hill said several concrete piers at the construction site had fallen down over the past month because they were not anchored. She said she had the site immediately examined by a geotechnical engineer, who advised that the western wall was also in danger of collapse.
"We're obviously very nervous. We really think that this is a council issue. Council approved this development [but] it was way too big for this site," she said.
Michael Ireland, whose balcony in the neighbouring apartment complex overlooks the gaping hole, was optimistic that the wall was "pretty stable". He simply hoped for the imminent restoration of his gas and hot water.
"[And] a reduction on my lease would be good," he said.
The former owner of a property adjacent to the hole said he and other residents on the street had made "comprehensive and very robust" objections about the development to Warringah Council before it was approved.
He said they voiced their concerns about, among other things, the possible geotechnical risk of the development.
A Warringah Council spokeswoman said on Tuesday morning that the council had issued an emergency order to "force the owner to carry out works to make the site safe".
"The construction has been overseen by a private certifier, Kudos Building Certification," the spokeswoman said.
"Under state laws, developers can appoint a private certifier to oversee development. Council does not get involved unless there is a threat to safety such as this."
The spokeswoman said the development was approved by the Land and Environment Court in January last year.