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First home buyers continue to dominate in news about the property market, as the proportion of first home owners as a percentage of all new home loan volumes reached 26.9 per cent in February, its highest since this data was first collected in 1991.

The federal government's moves in October last year to double the first home owners grant to $14,000 for established dwellings and tripling it to $21,000 for new built homes has driven higher levels of activity by first time buyers. Meanwhile investors represented just 24 per cent of loans in February, compared with nearly 31 per cent in July 2008.

It is expected that first home buyers will continue bolstering the market for home loans until the middle of the year, when the federal government's boost to the first home owners scheme is scheduled to end on June 30.

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First home buyer commitments as a percentage of total owner occupied housing finance commitments increased from 26.5% in January 2009 to 26.9% in February 2009, the Australian Bureau of Statistics said today.

This is the highest level recorded since the series commenced in 1991. Since the introduction of the First Home Buyers Boost in October 2008 the average loan size for first home buyers has risen from $264,500 to $280,600. The average loan size for all owner occupied housing commitments fell from $255,900 to $253,200 for the same period.

Read ABS release here

The first home buyer grant boost could lead to a residential property bubble if it became a permanent fixture in the housing market, according to Commonwealth Bank chief Ralph Norris.

The extra boost to the first home owners grant is due to end on June 30, but most home lenders and mortgage brokers are pushing for an extension to the incentives. Mr Norris warned that such a move could tempt borrowers with little capacity to repay mortgage debt to enter the market.

"I think the first home buyer grant has provided quite a stimulus to the market," he said. "But we've got to be careful this doesn't become an open-ended offer. If you look back to the sub-prime issues earlier in this decade they were largely brought about by people being encouraged to borrow who couldn't afford to borrow."

CBA has seen record mortgage volumes in January and February due to the first home buyer incentives, and has even had to hire more staff to clear a backlog of mortgage applications since the grant was introduced last October.

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The national surge in first-home buyers is evident in QLD as Australian Bureau of Statistics data for Nov 2008 - Jan 2009 revealed 6422 Queenslanders received the first home owners grant.

Meanwhile figures released by the ABS last week show Queensland suffered the largest drop in the country for new house building approvals in January, with a 5.1 per cent fall in house approvals. Approvals in Queensland are at their lowest level for many years.

Developers and builders are lobbying for the first-home buyers boost to be extended beyond June 30, when the extra $7000 is due to run out, fearing that without continued stimulus, new house building will remain in the doldrums and builders will go out of business.

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