Loans to build new homes have bounced back to near record levels, heralding a building boom in 2015.
The value of loans to both investors and owner occupiers for new housing hit $3.64 billion in October, up by 1.8 per cent from September.
It was the second highest result ever recorded and only marginally below the all-time high of $3.67 billion in February this year.
CommSec economist Savanth Sebastian said the figures pointed to a boom in home building boom in 2015, which should help slow the recent surge in house prices.
"Interest rates are at record lows and we haven't been building enough homes to house our growing population," he said.
"So it is hardly a surprise that demand for homes is at record highs."
Loans for owner occupiers buying or building new homes rose by 2.1 per cent to a record $2.85 billion.
For investors looking to build, loan approvals were up by a slim 0.5 per cent at $792 million for the month, and were 24 per cent higher than a year earlier.
Mr Sebastian said a surge in home building activity should help other sectors of the economy in 2015, such as retailing, boosting employment growth.
ANZ senior property analyst David Cannington expects the housing markets to cool in the final months of 2014 because of weak consumer sentiment.
But he is upbeat about the outlook for the new year.
"Strong population gains, a strong investor appetite for housing and pent-up home buyer demand will go some way to offsetting the negative impact of tentative market sentiment," Mr Cannington said.
"Solid growth in finance for residential construction and elevated building approvals, particularly for inner-city high-rise apartments, is likely to support building activity in 2015."
JP Morgan economist Ben Jarman said lending to investors is still outstripping owner occupiers, but the margin is getting smaller.
Lending to investors rose 20 per cent in the year to October, half the pace witnessed in late 2013.
Growth for owner occupiers was almost flat.
Mr Jarman said reforms by the Australian Prudential Regulation Authority should have an impact on lending patterns in 2015.
APRA has flagged a crackdown on annual growth in lending to investors of more than 10 per cent, and closer scrutiny on risky lending practices.
Mr Jarman said he expected the moves to have an immediate effect.
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