Borrowing has returned to pre-pandemic levels among home buyers who are planning to live in the property.
Owner-occupier loans are still well down from the peak seen in January 2021 when the real estate market was booming.
Australian Bureau of Statistics data for August revealed a 2.5 per cent lift in new owner-occupier loan commitments for dwellings over the month.
New loans for this cohort were still 12.3 per cent lower compared to the same time last year.
Lending by property investors also ticked up over the month, improving 1.6 per cent, but remained three per cent lower than 12 months prior.
The pick-up in lending comes as a recovery in home prices gathers pace, with national values as tracked by CoreLogic up 0.8 per cent in September, from 0.7 per cent in August.
National home prices are now just 1.3 percentage points shy of the record levels reached in April 2022.
A fresh set of building approvals data also pointed to an improving pipeline of new home building.
The bureau’s August dataset showed building applications approved by government lifted seven per cent, which followed a 7.4 per cent fall in July.
The improvement included a 5.8 per cent lift in private sector houses, which followed three months of stable movements.
The measure of new apartment approvals, which is more volatile than houses as it can influenced by large projects each month, rose by 9.4 per cent in August.
This followed a 14.6 per cent fall in July.
Oxford Economics Australia senior economist Maree Kilroy said home approvals had probably found a floor but remained at low levels.
New dwelling starts were likely to slide below 150,000 this financial year, she said.
“The mix of higher interest rates, delays and rising build costs have made it a challenging environment for new home buyers and developers alike,” she said.
Record migration was helping to support markets for homes that are already built, fuelling growth in rents and home prices.
“For new dwellings however, the relay of this will take a few years to play out,” Ms Kilroy said.