Loans to first-home buyers as a proportion of total new home loans fell 4 per cent in the year to April - after falling 12.3 per cent that month - equalling the record low set last November. This compared with loans to investors rising 29.9 per cent in the same period, after a 2.3 per cent rise in April.

St George senior economist Hans Kunnen attributed the lack of first-home buyers to state governments scrapping first-home buyer grants for existing dwellings, and a ''solid increase '' in house prices during the past year. ''State policies appear to have had their desired impact in directing first-home buyer demand towards newly-built homes rather than established dwellings,'' he said.

ANZ senior property analyst David Cannington said Bureau of Statistics data continued to show a market ''dominated by investors and upgraders/downsizers, while first-home buyer activity remains at historical lows''.

First-home buyer mortgages hit their peak in May 2009, when they accounted for 31.4 per cent of total new home loans.

Overall, the home loan market remains soft, economists say. Total housing finance edged 1.7 per cent higher in April, taking the annual figure to 20.7 per cent.

Mr Cannington expected the loan market to remain flat in coming months.

''Consumer confidence has weakened sharply in the past month, reflecting the sensitivity of sentiment to budget measures, presenting a softer outlook for house price growth, home sales and housing finance going forward,'' he said.

But he said low interest rates with the Reserve Bank likely to keep hold off any rises for at least a year, combined with ''pent-up'' buyer demand, will ''go someway to offsetting the negative impact of weaker market sentiment''.