First home buyers are an important component of the property market, buying both new properties and existing homes. The new properties contribute to the number of smaller dwellings available in Perth and the purchase of existing stock allows for the current owners to either upgrade or downsize, depending upon their individual circumstances.

The drivers for first homebuyers entering the market tend to be different to the other sectors with low interest rates and high rent stimulating many purchases. The latest reduction to historically low interest rates has had an immediate effect with applications for First Home Owner Grants (FHOG) jumping 22 per cent in May, reaching levels not seen since the Federal Governments Boost in response to the Global Financial Crisis.

In the twelve months to May, FHOG applications were up by 5,484 on the previous year (34.2 per cent) and double what they were two years ago. Whilst most first home buyers are still buying established properties, the number buying new homes rose 35 per cent in May and nearly 60 per cent over the year. In part this can be explained by the reduction of existing stock on the market with the number of properties on the market falling 42 per cent in the nine months to the end of December 2012.

There is, however, a significant difference in the regional areas with none of the top twenty areas for FHOG applications located outside of Greater Perth. This is the first time this has occurred since the Grant was introduced in 2000. That stronger demand reflected in the median purchase price with the metro area 35 per cent higher than regional areas. That gap is tiny compared to the start of the last cycle upswing in 2004 when the gap blew out to a massive 127 per cent in June 2004.

One of the surprises when looking at the First Home Buyers Grant data is just how many applications come in from Kalgoorlie. The town has made the overall top twenty list nine times in twelve years, topping the list three times and taking second place three times. Boulder makes the list in its own right twice making the region a stand out performer for first homebuyers over the last decade.

Wherever you choose to buy your first home, chances are it will be a good investment with the median price for grant application dwellings rising over three and a half times in the last twelve years.