House values across Perth are on track for one of their biggest single-month corrections as suggestions grow that the Reserve Bank may have to hold back any interest rate rises for a year.
The RP Data-Rismark measure of house values, watched closely by the Reserve, is showing values in Perth down 1.4 per cent this month.
In a sign of the sluggishness of the local market, house values have fallen 2.1 per cent since peaking in mid-December.
Over the same period, inflation climbed 0.7 per cent, effectively delivering a real 2.8 per cent fall in the value of most Perth residents' single largest investment.
Nationally, prices are down 1.6 per cent so far this month which, if maintained, would be one of the largest single-month falls since RP started recording data.
The effect of stagnating house prices has flowed through to retail sales, which across WA were flat in the first three months of the year.
And consumer confidence is back down where it was two years ago with gains around the time of the election of the Abbott Government eroded in recent weeks.
If house values edge down further, on top of slowing in the home building sector, the Reserve may have to revisit interest rate settings.
AMP Capital chief economist Shane Oliver said it may be too early to talk about rate cuts but an extended period without any change was increasingly likely.
Only a few months ago financial markets were starting to factor in an interest rate rise by year's end. But in recent weeks, especially in the wake of the Federal Budget, markets have turned.