The Federal Budget is being blamed for a drop in house prices and in new home starts as spooked consumers hold back from spending.
Analysts are starting to factor in an emergency interest rate cut by the Reserve Bank board - which meets today - to help prop up an economy that has weakened since Budget details emerged.
Measures of consumer confidence started falling in April after the planned deficit levy became public. After the Budget, they have dropped to levels not seen since the global financial crisis.
RP Data-Rismark's measure of house values showed a 0.8 per cent fall in Perth house prices last month. Through this year, house values in Perth have fallen 1.3 per cent, the only capital underwater so far this year.
Nationally, house values dropped 1.9 per cent, the biggest one-month fall in five years. Values in Melbourne plunged 3.6 per cent.
RP Data research director Tim Lawless said the drop in consumer confidence, linked to the Budget, had hit the property market.
"There is a very strong correlation between levels of consumer confidence and housing market activity," Mr Lawless said. "If we see sentiment levels remaining low, it is likely that housing market activity will be more sedate."
Preliminary readings of the retail sector have suggested shoppers pulled back from spending around the time of the Budget.
But it also appears consumers are losing their appetite for big purchases, with home approvals falling 5.6 per cent in April.
It was the third consecutive monthly decline.
Although WA defied the national trend - up 4.4 per cent - approvals are still down on their strong start to the year.
CommSec chief equities economist Craig James said the timing of the Easter school holidays had affected housing approvals, but the Budget was certainly a major factor.
"Given the amount of media speculation about a 'horror' Budget, no doubt many people decided to wait and see the Budget details before going ahead with new transactions," he said.
A Dun and Bradstreet survey to be released today shows 59 per cent of firms are concerned about the Budget's impact on their operations.