First home buyers are keener than ever to get onto the housing ladder, spurred on by stable house prices and a steady interest rate environment.
Official data published last week showed the proportion of loans going to first home buyers was 18.7 per cent in December, up from 18.3 per cent in November and the highest level since May 2002.
"First home buyers are again active in the market, encouraged by modest growth in house prices, stable interest rates, plentiful job opportunities and rising wages," CommSec chief equities economist Craig James said.
"With interest rates solidly on hold and house prices still flat, first home buyers will be a more dominant force in the housing market in coming months."
The Australian Bureau of Statistics (ABS) figures released on Friday showed housing finance commitments for owner occupied housing rose by 0.9 per cent to a seasonally adjusted 59,100 in December, close to the one per cent increase the market had been expecting.
Mr James said a particularly encouraging part of the December report was the 2.1 per cent increase in the number of loans for the construction of dwellings.
"The rental market has been tightening across the country, pushing up rents, with the key reason being that we are simply not building enough new homes or apartments," he said.
"While one swallow doesn't make a summer, the solid lift in construction loans in December points to brighter times ahead for builders, tradesmen and a raft of housing-dependent retailers."
The ABS report also showed the number of loans for the purchase of new dwellings rose by 2.3 per cent in the month, while the number of loans for the purchase of established dwellings grew by 0.7 per cent.
Citigroup senior economist Annette Beacher said the data had shown widespread strength, and that the Reserve Bank of Australia had "certainly engineered a very gentle, soft landing in the housing market.
"I think they would be quite pleased with how the housing market has turned in the last 12 months, and there's certainly no need to be changing monetary policy to influence it," she said.
Citigroup director Paul Brennan said housing credit growth was likely to pick up moderately as the current trend in finance commitments fed into the stock of loans.
"The RBA would not want to see households' appetite for debt rebound quickly, but this seems unlikely given that official interest rates are around normal levels and historically, house prices are still in the consolidation phase after the long boom," he said.
The report showed total housing finance by value rose 2.8 per cent to $18.867 billion in December.
Housing finance by value for owner occupation rose 1.1 per cent, while the value of housing loans to investors rebounded 6.8 per cent in December after falling 5.4 per cent in November.
