Demand for new houses remained strong in August following the relaxation of COVID-19 restrictions in most states and territories.
Australian Bureau of Statistics data shows dwelling approvals for private sector housing rose 4.8 per cent, building on the 8.6 per cent jump in July.
However, approvals for homes other than houses, such as apartments, dropped 11 per cent in August.
ABS director of construction statistics Daniel Rossi says approvals remain weak and near eight-year lows.
Overall, building approvals fell 1.6 per cent in the month.
BIS Oxford Economics economist Maree Kilroy expects the federal government's HomeBuilder program and record-low interest rates will put a floor under dwelling approvals nationally.
Despite the lockdown in Melbourne, dwelling approvals rose 1.8 per cent in Victoria, albeit dwarfed by a 33.8 per cent increase in Western Australia and an an 8.1 per cent rise in Queensland.
Meanwhile, Tasmania recorded a 26.2 per cent decline in dwellings, while NSW saw a 14.2 per cent fall.
For houses, there was a 34.9 per cent jump in approvals for WA and a 13.9 per cent increase in Queensland, but Victoria fell one per cent and NSW by 0.3 per cent.
However, demand for home loans remained slow, notably among investors.
Overall, Reserve Bank figures showed total credit was flat in August, dragging the annual pace down to 2.2 per cent, the lowest rate in more than 10 years.
Housing credit for owner occupiers rose 0.4 per cent for an annual rate of 5.4 per cent, but for investors it was flat in the month to be down 0.6 per cent in the year.
Business credit fell 0.4 per cent in August, but was still up 2.9 per cent in the year, while personal credit, such as car loans, declined a further 1.1 per cent to be down 12.5 per cent annually.
Josh Frydenberg has flagged more people will be able to access finance from March 2021, as long as the relaxed measures are backed by parliament.
The treasurer believes it is essential more credit is made available to support the economy out of recession.
He says existing rules are overly prescriptive, costly and complex.
"It's leading to delays in loans being made available. It's leading to loans not being available as they otherwise should, as the risk aversion on the part of the banks cuts in," Mr Frydenberg said.
