The first home buyers’ boom gathers pace and the latest figures show it hitting levels never seen before.

It’s further evidence, on the eve of the Federal Budget, for the Federal Government to cut the first home buyers grant to cool the breakneck pace of this surge in activity.

It’s driving the purchase of new homes, existing homes and powering the construction of new houses.

Housing finance figures for March from the Australian Bureau of Statistics, released this morning, clearly show the developing trend.

Finance for the construction of new homes hit the highest number in more than six years in March, while the value of the finance was almost $1.4 billion, the highest ever.

That’s up more than 30% on March 2008. And the proportion of first home buyers of total owner occupied housing finance commitments in March hit an all time high for yet another month; 27.3% in the month, up from 26.5% in February and 25.7% in December.

These are further signs of the key elements in the first stimulus package from the Federal Government: the boosts to the first home buyers’ grants for new and existing housing having a dramatic impact on levels of demand in the housing sector.

New home construction finance in March was up more than 27% since last December when it rose to $1.09 billion from $988 million in November as the first sniff of interest from first home builders hit the market.

It hit $1.146 billion in January, $1.206 billion in February and nearly $1.4 billion in March. That’s more than $4.8 billion in new home building finance approved since last December.

That will be a huge boost to companies in the sector, such as CSR, Boral, Brickworks and to employment among home builders like AV Jennings, Mirvac and Stockland, to name some of the big players.

On top of this the value of new homes (as opposed to construction) has also jumped strongly from December, up 21% in the four months to $765 million in March. The value of existing home finance commitments is up a more “sedate” 13% to $13.57 billion in March.

The ABS said the number of owner occupied housing commitments excluding refinancing rose 5.1% in seasonally adjusted terms in March 2009.

As evidence of the boom, first home buyers are borrowing more for their new and existing home purchases: the ABS said “the average loan size for first home buyers continues to rise, up $4,300 from February 2009 to $286,000 for March 2009.”

“This compares to the average loan size for all owner occupied housing commitments which rose by $11,500 to $263,200 for the same period.”

The seasonally adjusted number of finance commitments for the construction of dwellings for owner occupation “rose 13.9% to 5,565, the highest level since January 2002, while the value ($1.391 billion) is the highest since the series began.”

Overall, the ABS said that in seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions increased 6.7%.

Owner occupied housing commitments increased 7.3% and investment housing commitments increased 4.7%.

The seasonally adjusted estimates for the total number of owner occupied housing commitments rose 4.9% in March 2009.

And buyers believe interest rates will remain steady, or won’t rise significantly. The ABS said that in original terms, the number of fixed rate loan commitments as a percentage of total owner occupied housing finance commitments fell to 2.4% in March from 2.8% in February.