Hobart renters are now paying just $10 less weekly than they would be in Melbourne, with median house rents in Tasmania's capital surging to $420 per week, according to a new report.

The Domain March quarter rental report showed Hobart had the strongest annual growth of all the capital cities, with median house and unit rents at a record high.

Domain data scientist Nicola Powell said Hobart experienced 15.1 per cent year-on-year growth.

"It was the only capital city to record double-digit annual growth," she said.

"There is a number of reasons [for the growth]. We are seeing the available rental stock levels become depleted. Tasmania and Hobart have also been subject to surging population growth which is also putting pressure on the housing sector.

"I think we are seeing investors sway towards short-term leases rather than those long-term leases. That really does put pressure on the long-term leasing private rental market.

"Annually, unit rents in the Tasmanian capital have been on the uptick since December 2013, and median house rents are now only $10 behind Melbourne."

Dr Powell said increasing the availability of affordable rental stock was the key to loosening Hobart's rental market.

"Further rental growth in Hobart is dependent on a rise in supply, as recent building approvals and affordable housing proposals offered by the Tasmanian Government start to take shape," she said.

A Government plan to ease the accommodation crisis in Hobart has been rubbished by the Opposition. ( Supplied: Hobart City Council )

On Wednesday the State Government announced a pilot program that would pay homeowners up to $13,000 if they made their properties available to low-income renters.

The incentive package would match low-income households with suitable, affordable accommodation while providing landlords in the south with a payment of between $10,000 and $13,000, and landlords in the north and north-west with $10,000.

Dr Powell said the plan could help to ease the lower end of the market, provided investors were swayed by the incentives.

"What we have seen in Hobart is record-high tourism levels and so it is attractive for investors to opt for that short-term lease," she said.

"But what we are seeing is that when investors do offer those short-term leases, often the short-term gain in terms of dollar value is much higher than the weekly rent of a long-term lease.

"That is attractive for an investor.

"We are seeing one of the tightest rental markets in Australia in Hobart and I can see that those rental prices are likely to continue to rise."

Labor's housing spokesman Josh Willie described the State Government's plan as a "thought bubble".

"The private rental market at the moment is very lucrative for landlords and we also know that homestay accommodation is very lucrative for landlords," he said.

"There are serious questions here about the effectiveness of this scheme. We don't know any of the details, the Government doesn't know any of the details."

Hobart a hit with online searchers

In a separate report released by the realestate.com.au website on Thursday, Hobart was described as the most in-demand capital city, home to half of the top 10 most sought-after suburbs in Australia.

According to the property outlook report, Hobart listings on realestate.com.au averaged more than 4,500 page views per property, significantly higher than Melbourne's 2,267.

Accommodation in Hobart is tipped to remain expensive through 2018. ( ABC News )

Realestate.com.au chief economist Nerida Conisbee said the combination of a changing economy and low levels of development had increased buyer and renter demand.

"While the rest of Australia has had a development boom over the past five years, the level of development in Tasmania has remained fairly low," she said.

"We are not only seeing very high demand from buyers but we are also seeing higher demand from renters. On one hand it's great news, on the hand you do need to provide adequate housing and I think that is the challenge for the State Government.

"Although there's great news for home owners, it is becoming challenging for those wanting to enter the property market, as well as for renters.