Perth house prices dropped through the first three months of the year, dragged down by sagging interest in the city's inner suburbs.
Real Estate Institute figures show the city's median house price fell 1.6 per cent in the March quarter to $540,000.
It was the biggest fall of any capital city in the country, eclipsing the 1.1 per cent drop in Brisbane.
Despite the fall, overall Perth house prices remained up 4.9 per cent over the previous 12 months.
There are also signs that since the March figure was compiled, outstanding settlements of higher priced properties have pushed up the overall median.
The decline was driven by inner-city suburbs where the median price dropped 5.1 per cent to $935,000. It is now just 0.5 per cent higher than a year ago.
The story is better for home-owners further from the CBD.
While median prices in middle suburbs such as Stirling, Bayswater and Canning eased 0.9 per cent in the quarter to $421,500 they stand 4.6 per cent higher over the past 12 months.
And outer suburbs continue to show growth, up by 0.6 per cent in the quarter to a median price of $482,000. WA's biggest fall was in Kalgoorlie-Boulder where the median dropped 12.7 per cent to $320,000 while the biggest increase was in Mandurah where prices lifted 6.3 per cent to $425,000.
The drop in prices is bringing some relief to the rental market.
Rents were flat in Perth through the March quarter to be 2.1 per cent lower over the year at $470 a week.
Nationally, median house prices climbed 1.9 per cent for the quarter to $606,517.
The OECD again warned that Australian houses were among the most overvalued in the developed world. The Paris-based think tank analysed the ratio of house prices to rents and incomes.
"For the OECD countries, where a sufficiently long time-series of house prices, rents and incomes is available, these ratios remain well above the historical averages for a majority of (OECD) countries," it said.