First-home buyers have returned to the housing market at the fastest pace in 10 years, according to the ABS.

The value of new home loans granted to first-home buyers rose 46% from 2.9 billion in January 2019 to $4.2 billion in January 2020.

Some 9,945 first-home buyers took out loans in the month, up 26% from a year ago.

Since the May 2019 election, loans to first-home buyers are up 35% while other owner-occupiers are up 29%.

Domain economist Trent Wiltshire says the rebound has been driven by owner-occupier borrowers and first- time buyers in particular, although investors have bounced back too.

“The changes to bank lending rules, combined with lower rates, mean first-home buyers in particular can borrow more,” he says.

“But the first-home buyer activity also has the effect of pushing up prices as well. In that sense, the First Home Loan Deposit Scheme is not well timed, as it will contribute to price rises at the lower end of the market.”