Australia's housing sector is in the tentative stages of a recovery as investors and home owners take advantage of low interest rates.
The number of home loans taken out in February rose two per cent, the first monthly rise since September last year.
That's despite the percentage of loans given to first home buyers falling to its lowest point in nine years.
Of those who took out home loans in February, 14.4 per cent were first home buyers, the lowest level since June 2004.
St George senior economist Jo Heffernan said the rise in approvals was a sign low interest rates were providing a boost for the housing sector.
"We are expecting to see some further pick up from here, but we would need to see a few more months' data to confirm a pick-up was underway," she said.
Home prices rose 2.8 per cent in the March quarter, according to property research firm RP Data, while building approvals for new homes rose 3.1 per cent in February, according to the Australian Bureau of Statistics.
Housing is one of several underperforming sectors the Reserve Bank of Australia is counting on to improve during 2013 to help offset an expected slowdown in mining investment.
The RBA cut the cash rate 1.25 percentage points in 2012, bringing it to its current low level of three per cent.
But while builders welcomed February's improvement in home loans, they said more needed to be done to stimulate growth in housing construction.
"The concern is today's figure could be another in the volatile series of rises and falls witnessed over the past year," Master Builders Australia chief economist Peter Jones said.
"The Reserve Bank must continue to act by cutting interest rates and ensuring a sustained building industry recovery can take place and boost the non-mining economy," Mr Jones said.
CommSec chief economist Craig James said investors were driving the nascent recovery in the sector.
But he said the continued fall in first home buyers was concerning.
The percentage of loans taken out by first home buyers has been falling since October when New South Wales and Queensland stopped giving out first home owner grants to people buying established properties.
"Perhaps the state governments need to rethink about the way that the incentives are provided so they can provide some assistance to the market," Mr James said.
Bu Ms Heffernan expects first home owner numbers to improve as 2013 rolls on.
"It (the weakness) has continued longer than we would have expected following those state government changes," she said.
"But at some point you would expect to see that turn."
