The proportion of first home buyers taking out loans fell to a nine year low in August.

First home buyers made up 13.7 per cent of all home loans approved in August, down from 14.7 in July, figures from the Australian Bureau of Statistics shows.

The total number of home loans approved in August fell 3.9 per cent, the first fall in seven months.

"There are signs that first home buyers are continuing to struggle and in some sense are being priced out of the market," JP Morgan economist Tom Kennedy said.

Activity from property investors has been offsetting lower finance demand from first home buyers for most of 2013, he said.

"Those investors are bidding prices higher and that's pricing out the more price sensitive, lower end of the market - the first home buyers."

CommSec chief economist Craig James said the data may be showing that younger people do not see buying a home as a high priority.

The withdrawal of state government assistance for first home buyers is also a factor, he said.

"Gen Y is generally more interested in travel and other life experiences than being saddled with home loan repayments," he said.

"They are quite happy with investors buying or building the properties that they will rent."

The fall in first home buyers comes despite eight cash rate cuts by the Reserve Bank of Australia since November 2011, Real Estate Institute of Australia president Peter Bushby said.

The proportion of first home buyers in the market has been below the long term average of 20.1 per cent for quite a while, he said.

The new federal government needs to review the amount of government support for first home buyers, and look at "inefficient" state taxes such as stamp duty, Mr Bushby said.