First-home buyers have continued to take advantage of favourable market conditions, with their participation reaching a level that has not been seen for a decade, according to the latest study by NAB.

During the October quarter, the first home-buyer segment represented the only growth in lending. In fact, NAB figures show that financing activity from the segment increased by 21%.

Andy Kerr, executive for homeownership at NAB, said the data indicates many first-home buyers are getting their dream home earlier than they thought possible.

"Demand has been supported by historically low interest rates and more government support, such as the First Home Loan Deposit Scheme and HomeBuilder," he said.

"A brief pullback in property prices also helped FHBs as the uncertainty of COVID-19 put many plans on ice, with investor demand slowing noticeably."

Kerr added that the low-rate environment, which is likely to remain over the next three years, would ensure the continued growth in first-home buyers.

"We expect this demand to continue well into 2021, especially given the current conditions make buying cheaper than renting for many prospective first-time homeowners," he said.

Geographical data from NAB has also illuminated where first-home buyers are gravitating towards when it comes to buying a home.

The strongest growth in first-home buyer lending was recorded in Queensland, with activity from the segment increasing by 39% during the three-month period. Western Australia closely followed with 37%.

Activity from other states, excluding Tasmania and Victoria, also remained elevated. However, it is crucial to note that even the two weakest states reported growth in first-home buyer lending, albeit only at 3%.

NAB's data further supports the increasingly-remarked upon shift in focus to regional areas. In fact, regional markets across Australia have reported a 44% surge in first-home buyer activity, with regional New South Wales posting the most substantial gain at 57%.

Kerr explained the COVID-19 pandemic has changed the preferences of many home buyers when it comes to dwellings, and he expects this to last. 

“Flexible working arrangements implemented due to COVID-19 are encouraging many Australians to consider a tree or sea change as easy access to the CBD moves down the priority list,” he said.

“Many are seeing the potential of more land and a more relaxed lifestyle with easy access to areas like the Blue Mountains in NSW and Great Ocean Road in Victoria proving very popular.”