The average cost of renting a property in Wales is now £700 per month, an annual increase 5.6%.
Across the UK, rents increased at their slowest pace in seven years in 2016, according to an index.
Lettings network Countrywide said rents increased by 1.6% across Britain to reach an average of £927 per month.
The annual increase was around half that seen in 2015, when rents recorded a 3.1% uplift. Last year also marked the slowest annual increase seen since 2009, when rents increased by 0.9%.
The slowdown has been driven by an increase in the number of homes available to rent, with London seeing a particular increase in the choice of properties for tenants.
A stamp duty hike for buy-to-let investors on April 1 2016 prompted a rush of landlords snapping up properties ahead of the deadline and will now be available to renters.
Johnny Morris, research director at Countrywide, said landlords have had to work harder to attract tenants as the number of homes available to rent has grown.
Mr Johnny said, “Landlords are increasingly tempting sitting tenants to renew contracts with the promise of unchanged or even lower rents.
Rental growth will likely increase in 2017. Squeezed yields, fewer tax breaks and higher stamp duty rates are likely to deter landlords from expanding their portfolios.
Fewer homes on the market will leave tenants with less choice and negotiating power”.