Building approvals soared by 19 % in New South Wales in July suggesting a demand for new build properties and a strengthening in the economy.

In June, NSW recorded a seasonally adjusted approval increase of just 3.4%, while Western Australia experienced the highest approvals at 21.1% with Victoria following closely behind with 17.4%.

A month on and the east coast state has topped Queensland and Victoria - the states with the highest approvals after NSW - by 14.7% and 10.4% respectively.

The Australian Bureau of Statistics has recorded an overall rise in building approvals for the last two months, a 9.3% increase in June and a 7.7% increase in July.

However, REINSW President Steve Martin is cautious.

"There is no doubt these are encouraging results with NSW growth more than double the national average", said Martin.

"The strong growth recorded in July is a good indication that things are starting to turn around in New South Wales but it is still early days.

"What we need to see is a trend of significant growth in consecutive months before we can say that we are witnessing sustained recovery in the new building sector.

"What we don't need is the Reserve Bank jumping the gun on the back of one month's strong data and increasing interest rates."