Home loan approvals were surprisingly strong in April as low interest rates sparked demand for new houses.
Home loan approvals rose 1.0 per cent in the month to 53,951, beating economists' expectations of a two per cent fall from March.
A strong lift in lending for the construction of dwellings, up 4.3 per cent in April, was particularly pleasing, CommSec chief economist Craig James said.
"If we are going to get home prices down to more sustainable levels then you need more supply on the market, and clearly there's people wanting to build new homes to live in, rather than investment," he said.
Rising demand for new homes could take some of the heat out of the Sydney and Melbourne property markets, Mr James said.
"I tend to think that the situation in Sydney and also Melbourne is going to sort itself out over the next 12 to 18 months, there's an incredible amount of new supply being built."
The latest house price figures from CoreLogic RP Data show a rise of 14.5 per cent in Sydney and 8.8 per cent in Melbourne over the past year, much higher than in other mainland state capitals.
The value of housing finance rose 2.9 per cent in April to $32.71 billion, with investor housing loans up 2.6 per cent and owner occupied housing up 3.1 per cent.
The Reserve Bank may be concerned by rising investor housing loans, given they also surged in March, JP Morgan economist Tom Kennedy said.
"Today we saw pretty sold numbers out of both owner occupiers and investors," he said.
"The four month (investor) trend is probably a little bit weaker than last year but it's still too hot for where the RBA and APRA (Australian Prudential Regulation Authority) would want it."
Tighter lending guidelines among some banks would probably "start to bite" in the next few months, Mr Kennedy said.
"We do expect these numbers to cool," he said.
Westpac economist Matthew Hassan said February's interest rate cut was probably the main driver of April's stronger than expected lending, with gains in approvals across all states.
The RBA cut the cash rate to 2.25 per cent in February, before slashing by another quarter of a percentage point in May.
"Overall, the April figures indicate housing market activity may have caught a bit of an uplift from the February rate cut," Mr Hassan said.
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