The housing downturn in the two biggest cities, plus government incentives, are creating new opportunities for first-home buyers. New ABS data shows that the market share of first-home buyers is now at its highest level in seven years.

Overall the value of new housing loans dropped 2.5% in November and was 16% below the level of a year ago, which was close to the market peak, but loans to FHBs continued to rise. The ABS report shows the value of lending to investors nationally dropped 4.5% to $9.3 billion, the lowest level in six years and down almost 30% from the peak reached in early 2017.

But in some states investor loans are still rising, notably in Queensland and South Australia. Owner-occupiers upgrading their homes arranged $10.1 billion in mortgage commitments in November, down 3.1% from the previous month and 17% below the peak in the middle of last year.

The fall in the Sydney and Melbourne markets, together with state government tax breaks, is encouraging a lift in purchases from first-home buyers, whose share of housing finance has risen to 18.3%.