The sluggish housing sector may have turned a corner, after housing finance figures for the last quarter showed tentative signs of improvement, economists say.
They also say that stronger economic growth, lower uemployment and growing expectations that interest rates will remain on hold until next year could create better conditions over the coming months.
The number of home loans approved in July rose one percent to 49,813 official figures show.
Economist had forcast a 1.5% rise in housing finance commitments had risen.
The Australian Bureau of Statistics (ABS) said total housing finance by value - including lending to investors - rose 1.6% in July.
Commonwealth Bank senior economist John Peters said the bounce in housing finance showed the sector was imporving.
"We Expect husing to remain quite resilient in the coming months as part of our view that the economy is going to pick up speed from here, "Mr Peters said.
"Increasing economic growth and falling unemployment will continue to underpin housing activity."
JP Morgan economist Helen Kevans said home loan approvals should continue to accelerate throughout the second quarter.
"The decent bounce in housing finance stemmed from fading expectations on the rate hike front, which probably will stimulate home loan demand further in 2011.
"The recent plunge in consumer setiment, down 12% since mid-year, has been marked by consumers becoming more downbeat on their own finances."
Among the states, Queensland housing finance showed the Biggest imporvement in July up 2.3%, seasonally adjusted
NSW rose 1.5%, ACT was up 0.3% The largest Fall wwas in SA down 3.9% and WA fell by 1.4%/ Victoria was steady