By Robert Carry

Government stimulus measure and low interest rates have triggered an increase in residential building approvals, experts have said.

The latest Australian Bureau of Statistics (ABS) figures showed the total number of dwellings approved rose by 2.7% in September. The figures were boosted by a range of affordable housing projects implemented by the federal government.

Angus Raine, Raine & Horne CEO, said he expects the property market will absorb the Reserve Bank's latest interest rate hike but warns future increases could hurt first home buyer aspirations. 

"We believe the decision to tighten won't affect home prices. In many markets across Australia, demand is outstripping supply."

Proprietor of Raine & Horne Marrickville in Sydney's inner-west, Michael Smith, said the local property market should absorb the latest increase.

 He continued, "The Inner West property market is well located and can cope with moderate interest rate increases. Many of our buyers are prudent and have factored in the rate tightening and the extra repayments."