Despite rises in the majority of capital cities, Australia’s weekly asking rents rose by the slowest rates on record over the 12 months to May.

Figures in a new report from Core Logic RP Data show the average combined capital weekly asking rent rose just 1.5% to $488 over the year to May.

Over the period, five out of eight capital cities experienced rental increases, but falls in Perth, Canberra and Darwin combined with the ongoing investor-driven construction boom held back the national average.

“The sluggish pace of rental appreciation can likely be attributed to the ongoing boom in dwelling construction across Australia’s capital cities accompanied by record high participation in the housing market from investors,” the report says.

Darwin and Perth recorded the biggest falls over the 12-month period, with rents down 5.5% in Darwin to $567 and down 4.5% in Perth to $477.

Canberra recorded a drop of 0.6% to $500.

Hobart saw the biggest rise of any capital city, with a 3.2% increase to $342, while Sydney was just behind with a 3.1% increase to $595.

Melbourne, Brisbane and Adelaide saw rises of 2%, 2.3% and 1.2% respectively.

According to the report, rental growth is unlikely to pick up pace any time soon. 

We anticipate that the rate of rental growth will slow further over the coming months," the report says

"With residential construction activity continuing to rise, particularly for inner city units, the increase in housing stock specifically targeted at the investor segment of the market is likely to be good news for renters."

Over the same 12-month period Hobart was only city to see rental yeilds increase, up from 5.2% to 5.4%. 

Brisbane yeilds held steady at 4.6%, while all other cities saw yeilds fall

The rental figures come at an interesting time, as the Federal Opposition and the Greens push for changes to negative gearing, while the Government claims changes to the scheme would drive up rents.