The latest data from the Real Estate Institute of WA shows Perth’s median house price in March fall 3.7 per cent to $520,000—lower than the revised December 2015 median of $540,000.

According to Domain chief economist Andrew Wilson, house prices in the Perth market continue to trend downward over the past 12 months.

“The key to the resumption in prices growth in the Perth market is a sustained recovery in the local economy with early signs providing some optimism,” he said. “Lower interest rates ant tax cuts will act to improve affordability and restore confidence. Perth, however, can expect another flat to lower year of prices growth in 2016.”

This is great news for first home buyers looking for affordable options to enter the market.

“Forty-five per cent of house transactions in the three months to March were in the more affordable sector of the market,” said REIWA president Hayden Groves. “This shows that there are more affordable options available.”

However, land sales seem to bucking the trend, as there is a surge in demand for smaller lots in Perth. Land prices posted an 8.9 per cent increase in just three months. Regional house prices in WA are also up 3.8 per cent for the year.

“We can see a higher demand for smaller lots and that people are paying a premium for them, particularly in inner urban areas,” Groves said. “We’re seeing a shift from people wanting a larger block to now seeking something that’s more manageable and better suited to their busy lifestyles.”