The number of first homebuyers has dwindled following a string of rate rises and the withdrawal of the government grant boost.

According to the latest data from Australian Finance Group (AFG), the proportion of loans taken by first time buyers sank to just 11.3% in February 2010 - the lowest level since February 2009. First homebuyer's activity has fallen continuously since August 2009.

In contrast, investors have continued to dominate the market, taking 34.1% of the total loans sold by the mortgage broker. Mark Hewitt, general manager for sales and operations said this is the highest level the company has ever recorded and corresponds to a 25% increase from six months ago.

Investors in NSW were the most active, taking 38.5% of all loans while Victoria saw loans for property investment climb to 37.2%. WA and Queensland recorded the lowest proportion of investment loans during February at 29.9% and 29.5% respectively although these figures represent robust levels of investment activity.

"Investor confidence has been rising for several months, but we haven't been expecting a figure for February as strong as this one," said Hewitt.
"Investors are now the driving force of the market, encouraged by rising property prices in recent months, and the longer term view that a housing shortfall will continue to underpin future price growth as well as rental yields."

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