Fewer Australians are buying luxury homes in Australia as demand has shifted to the lower end, dominated by first homebuyers.

A report released recently by RP Data detailed in numbers the trend many real estate agents and other experts on the ground have already detected - there has been a definite shift to the lower end in the housing stock sold throughout the country since 2007.

With an economy that's still uncertain very much on their minds, more buyers are avoiding anything too lavish. And, with so many incentives behind them, first homebuyers are now driving the demand as purchasing has become cheaper than continuing to rent.

"These figures come as no surprise considering that first homebuyers now represent more than 25% of all owner-occupied housing, up from 17% one year ago," says RP Data National Research Director Tim Lawless.

Every capital city recorded a lower number of house sales of more than $1m in 2008 than the year earlier, with Perth showing some of the most dramatic shifts. Houses priced at $800,000 and over comprised more than 16% of all house sales in the second half of 2007, compared to just 10% in the second half of 2008.

The shift was not uniform across the country, however. In Hobart, for example, little had changed from a year earlier, while in Adelaide there was actually a higher percentage of buyers above $600,000 than in 2007 - and fewer below $300,000.

But as figures for 2009 are not yet available in the RP Data study, even those rare exceptions could have since changed.

South-east Melbourne has been the biggest focus for homebuyers in the lower price range of late, with the suburbs of Pakenham and Berwick taking out the highest number of sales in the two most affordable price categories.

"Located 50km from the Melbourne CBD - and with a median house price of $270,000 - Pakenham recorded the highest number of houses sold for under $300,000," says Lawless.

Yet, showing that the demand on the lower end can have a positive effect, Lawless says the median house price at Pakenham has actually increased by 7.8% over the 2008 calendar year.

Berwick recorded 156 sales in the $300,000-400,000 price bracket, with a median price of $350,000, the highest number of sales in this price range over the second half of 2008.

"The median house price at Berwick also defied the slow-down, increasing by 6.1% over the last calendar year," says Lawless.