First home buyer loans forecast to outpace broader market in 2025

First home buyer loans are projected to grow 6.5% in 2025, outpacing the broader owner-occupier market for the first time in years, according to a new report.

The First Home Buyer Mortgage Insights report by Money.com.au shows the total number of first home buyer loans reached 125,220 in 2024, recording 5.9% annual growth.

This growth rate has now caught up with the rest of the owner-occupier market, which grew at 6% during the same period.

Money.com.au’s Property Expert Mansour Soltani said this marks a turning point for first home buyers.

“First home buyers are always playing catch-up with upgraders who have equity behind them. But now, that gap is finally starting to shrink. This is partly due to the uptake of state grants and the First Home Guarantee,” Mr Soltani said.

The report forecasts first home buyer loans will rise to 133,308 in 2025, while the broader owner-occupier market is expected to grow by 5.3% to 216,210 loans.

Victoria led the nation with the strongest annual growth in first home buyer loan numbers, recording an 11% increase last year — double the national growth rate.

The state also had the highest share of first home buyer loans, accounting for 32.5% of all new owner-occupier loans.

Queensland ranked second with 6% annual growth, followed by South Australia at 4.6%.

However, some states experienced declines in the final quarter of 2024, with Western Australia seeing 9.9% fewer loans compared to a year earlier and New South Wales experiencing a 9.1% decline.

The average loan size for first home buyers rose by 6% last year to $533,066, adding $30,248 to the average loan size from 2023.

Despite this growth, first home buyers still borrow significantly less than other owner-occupiers, who have an average loan size of $698,053 — a 31% premium or $164,987 more than first-time buyers.

South Australia has emerged as a potentially attractive market for first home buyers, with first home buyer loans now making up 34.9% of all owner-occupier loans in the state — the highest share on record.

Growth in the number of first home buyer loans in South Australia remains modest at 5.1%, below the national average, suggesting less competition in that market.

The report also highlighted the trend of “rentvesting” — first home buyers purchasing investment properties while continuing to rent themselves.

First home buyer investor loans grew at 12% annually, more than double the pace of first home buyer owner-occupier loans at 5.5%.

New South Wales recorded the highest annual growth in first home buyer investor loans at 20.8%, followed by Western Australia at 19.5% and Queensland at 12.7%.

The average first home buyer investor loan size was $561,343, up 1% from a year ago.