First-time home buyers are flooding into the housing market to take advantage of the federal government's increased grants and low mortgage rates.
First-time home buyers made up 25.4 per cent of home loans granted in December, the highest proportion since December 2001 - the height of the last major housing boom.
As part of of last year's $10.4 billion economic stimulus package, the government doubled the first home buyers grant to $14,000 for the purchase of existing homes, and to $21,000 for newly built properties, until June.
The Reserve Bank of Australia (RBA) had cut its official cash rate by 300 basis points between September and December, a large proportion of which was matched in mortgage rates.
Earlier this month, the RBA cut the cash rate by a further 100 basis points to a 45-year low of 3.25 per cent.
Overall, 52,874 owner-occupier home loans were taken out in December, a 6.4 per cent seasonally adjusted increase compared to the previous month.
This is the third consecutive monthly increase.
Economists had expected the number of owner-occupier home loans to rise by 3.5 per cent in December.
