A lack of supply in the housing market is not only pushing property prices up, but rents too, and new research from RP Data says the situation will worsen over the next 12 months.

RP Data's December quarter Rental Review shows that rents in capital cities rose 4.2 per cent last year, compared with a 2.9 per cent rise nationally.

Currently, Darwin is the most expensive city in Australia to rent a house, with a median weekly rent of $520. It is followed by Canberra at $490 and Sydney with a median weekly rent of $450.

The cheapest capital cities to rent houses are Adelaide, where renters will pay $325 per week, and Hobart at $335.

For those looking to rent in the Pilbara, they will have to fork out upwards of $1,650 per week to rent a house.

RP Data says this reflects the competition among resources workers for housing in the region.

While the exponential growth in the Pilbara region may be an anomaly, the report's analyst, Cameron Kusher, says he is forecasting an increase in rents for both houses and units of as much as 7 per cent this year.

"We're expecting that rental growth is actually going to be quite a bit stronger than what we've seen over the last 12 months to 24 months," he said.

"It hasn't really been that strong when you look back a little bit further how much rents were growing, and we expect rents will increase for both houses and units by at least 5 per cent and possibly 7 per cent by the end of 2011."

He says higher rents often force people to look for accommodation further away from the city ring, which puts more pressure on transport infrastructure.

"Not just our roads but trains and buses," he said.

"More [housing] supply would be a very good thing to help curtail those predicted increases in rental rates, but at the moment developers just can't really make that new stock stack up."

But he does not expect the situation to encourage more buyers to enter the market just yet.

"Affordability is the biggest issue at the moment in the housing market and that's why we are not seeing a lot of first-home buyers particularly active at the moment," he said.

"Plus we are finding that particularly on a monthly basis at the moment, the average loan size to a first-home buyer is reducing - so it suggests that people looking for mortgages are having to come up with a greater level of savings."