New South Wales is leading the charge, with first-home buyer numbers surging 70.9 per cent between the 2016 and 2017 September quarter.

Across the country almost 29,000 first-home buyers entered the market in the three months to September, according to the Adelaide Bank/Real Estate Institute of Australia (REIA) Housing Affordability Report released on Thursday.

The 36 per cent year on year increase means first-home buyers now make up 24.5 per cent of the owner-occupier market, excluding refinancing, thanks to increases across all states and territories.

Stamp duty concessions, tighter lending to investors and lower interest rates were big factors in the return of first-home buyers, president of the REIA Malcolm Gunning said.

"It's the best opportunity for first-home buyers in some time," he said.

"There were seven different pieces of regulation coming in around property - and none of them affecting first home buyers. So they are - rightly so - given the inside running."

With investors facing higher interest rates, first-home buyers are also facing less competition, said Tim Reardon, principal economist for Housing Industry Association.

"Changes to APRA rules have increased the relative interest rate for investors. Their numbers have dropped, making room for first-home buyers", he said.

"NSW and Victoria introduced quite good incentives for first-home buyers", he added.

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Because of the record number of apartments being built in metropolitan areas, there was more housing stock priced at a lower level, he said. The federal government's superannuation scheme, which just passed the upper house, may also help some first home-buyers to save a deposit, he said.

The increase in first-home buyers is a result echoed by theBankwest First Time Buyers Report, released on Tuesday, which showed there were more than 94,000 first homes bought across Australia in the year to August - a 5.6 per cent increase, year on year.

It comes at the same time as a slight improvement to housing affordability, with the REIA report finding mortgage repayments are now chewing up less of the median family income.

Over the September quarter, the proportion of the national median family income spent on the average loan repayment dropped 1.2 per cent to 30.3 per cent.

While affordability improved in both NSW and Victoria, they are still the least affordable states. The proportion of income spent in NSW dropped 2.1 per cent over the quarter to 36.1 per cent, while in Victoria it dropped 1.2 per cent to 32.2 per cent.

Queensland, South Australia and Tasmania also had small improvements in mortgage repayment affordability.

The ACT and the Northern Territory are the most affordable places to have a mortgage. In the NT, 19.4 per cent of income is needed to meet mortgage repayments, and in the ACT it's just 18.5 per cent.

However Western Australia remains the most affordable of the states, and is where first-home buyers make up the biggest percentage of the owner-occupier market, at 36.2 per cent.

The big winner for renters was also Western Australia. With just 17.4 per cent of the average income spent on the median rent, it has leapfrogged the ACT - sitting at 18.1 per cent - to become the most affordable.

NSW was the least affordable state for renters, followed by Tasmania - something that could in part be attributed to baby boomers retiring to the Apple Isle, suggested Mr Gunning. NSW, the ACT and Tasmania all became less affordable for renters.

Victoria stayed steady, with the proportion of income needed for a median rent repayment holding at 23.1 per cent, with a slight decrease year on year.

Queensland saw an improvement in rental affordability, as did South Australia and the Northern Territory.