James Mitchell from Real Estate Business Online reported earlier in the month that rental rates have increased in the past 12 months despite slow growth in property values.

Weekly rental rates increased nationally by 1.4 per cent and by 2.7 per cent in the capital cities over past 12 months, according to the RP Data March 2011 Quarterly Rent Review.

The rise in rates can be attributed to sluggish property value growth over recent months, RP Data report analyst Cameron Kusher said.

“With limited purchasing activity based on concerns about affordability, we are likely to see increasing demand for rental properties,” Mr Kusher said.

Melbourne and Darwin recorded no growth in house or unit rents, while Sydney’s house rents remained unchanged over the quarter.

Sydney and Melbourne are the only two cities that recorded growth in dwelling values over the past month based on the February RP Data and Rismark home value index.

Darwin is the most expensive capital city to rent a house at $520 a week.

The capital city tied with Sydney to be the most expensive city to rent a unit, with both boasting an average rent of $430 a week.

Hobart has the cheapest units for rent at $280 a week and Adelaide the cheapest houses at $330 a week.