Australia’s housing market has become gripped in a first-home buying frenzy following the federal government’s controversial decision to supercharge its First Home Guarantee scheme last month.

The scheme allows buyers to enter the market with just a 5 per cent deposit and have government “guarantee” the rest of a traditional 20 per cent deposit, helping buyers get into the market faster.

New figures have revealed a 39.2 per cent surge in applications for the scheme since it was expanded in October, pushing first-home buyer spending to levels not seen in years.

The data, from Australia’s largest mortgage aggregator Loan Market Group, revealed the increase in first-home buyers occurred in every major state.

Queensland was the epicentre of the surge, recording a 55.2 per cent jump in aver

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