By a staff reporter, with AAP
The demand for home loans beat expectations in February, marking the first increase in five months, according to the Australian Bureau of Statistics.
The data showed the number of home loans granted in February lifted a seasonally adjusted two per cent to 45,423.
The result compares to an upwardly revised 44,547 in January.
Bloomberg had expected the number of housing finance commitments to lift by 1.5 per cent.
Total housing finance by value rose a seasonally adjusted 1.4 per cent in February, to $21.826 billion.
CommSec chief economist Craig James said the findings were broadly encouraging for the housing sector.
"Investors look as though they are continuing to lead the way," he said.
"So investors see the value in the housing market but first home buyers are still to be convinced."
First home buyers made up 14.4 per cent of all new housing loans in February, down from 15 per cent the previous month, and 17.4 per cent a year ago, despite lower interest rates.
Mr James said grants from state governments for first home buyers buying newly built homes or for building their own home were proving unpopular.
"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.
St George senior economist Jo Heffernan said the rise in approvals was a sign the housing sector was picking up after several months of weakness.
"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.
While demand from first home buyers remained weak, Ms Heffernan said it was likely to improve over the coming months.
"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 around."