The demand for home loans was stronger than expected in February, but the proportion of loans to first home buyers is at the second-lowest level on record, according to the Australian Bureau of Statistics.
The data showed the number of home loans granted in February rose by 2.3 per cent to a seasonally adjusted 52,460.
Economists surveyed by Bloomberg expected the number of housing finance commitments to lift by 1.5 per cent in the month.
Total housing finance by value lifted by 2.9 per cent in February, seasonally adjusted, to $27.644 billion.
Loans to first home buyers, as a share of total of housing loans, fell to 12.5 per cent -- the second-lowest level since data commenced in 1991.
The average loan size fell by 2.3 per cent in February but is almost 6 per cent higher over the year.
The value of loans for investment housing rose by 4.4 per cent in February to $10.737bn, after falling by 3.3 per cent in January.
The value of loans for owner occupied housing lifted by 1.9 per cent to $16.907bn in February.
JPMorgan economist Ben Jarman said construction loans for investors were up 106 per cent in the month - the biggest monthly rise since 2008.
The amount of construction loans issued for investors had risen half a billion dollars to $1.01 billion.
"All the right sorts of things are happening when you look at building approvals and new homes," Mr Jarman said.
"The Reserve Bank has been hoping activity in housing would transform into more home building and if you've got loans for investor construction jumping a lot that's obviously a positive."
Commonwealth Bank senior economist John Peters said the figures are further confirmation that the recovery in housing construction is well underway.
"Lower interest rates are working," he said.
"There is further evidence self-managed superannuation funds are certainly gearing into property at the moment.
"It also tells us something about first home buyers, they're finding it difficult to get into the market.
"There's a lot of caution, households are saving a lot more and they are very reticent about taking out new loans."
Mr Peters said the housing sector looks like it will take over from mining investment as the main driver of growth for the Australian economy.
"The evidence is there that the housing market is picking up and we expect it to continue to do so," he said.