After hitting an eight-year high in December and immediately pulling back in January, the number of home loans approved in Australia last February once again rose by 1.5 per cent, indicating a solid demand for housing despite the seasonal market cooling. According to the Australia Bureau of Statistics, it was still a modest rise in spite of the two per cent forecast made by housing analysts.

Lending to owner-occupiers enjoyed a boost of 1.7 per cent this February while approvals for investment housing also went up 4.1 per cent, based on their value. The value of total housing finance increased by 2.6 per cent in the said month.

David Cannington, senior economist of ANZ, said that the result conforms with the healthier-looking house prices and auction clearance rates. However, he expects sales activity indicators to remain timid in the months to follow.

"Sales market activity definitely has improved in recent months compared with the end of 2015, but the improvement has been quite tentative," Cannington said. "Some of the increases in mortgage rates and the impact of tighter regulation, particularly on investor sales activity, are creating some headwinds."

He also noted that the Reserve Bank, with its decision to put the cash rate on hold at a record low of two per cent for the 11th consecutive month, had been aiming for a slowdown in the increase in house prices. The data released for February may have eased them a little. ANZ predicts that the cash rate will remain on hold for the remainder of 2016.