NSW is boosting hopes the economy is "moving into recovery", after home-lending figures released yesterday showed the state leading the country in a housing turnaround.
Economists said the figures highlighted the Sydney housing market had "bottomed out", allowing more people - including first-home buyers - to join the market.
The outlook was also "looking better" for the flat job market.
The number of home loans approved for owner-occupied housing in NSW rose 5.7 per cent in November, according to the Australian Bureau of Statistics' seasonally adjusted figures. That compared with the national average of 1.3 per cent.
Tasmania recorded a 6.5 per cent jump but NSW had a higher number of approvals, driven by first-home buyers following the Government's doubling of the homeowners grant.
There was still an overall decline in the housing market, which slowed by about 1 per cent in November.
But Residex's chief executive officer and housing analyst John Edwards said the latest housing figures signalled "signs of recovery".
"The more houses you have, the greater demand for whitegoods, which is reflected in retail sales and jobs," Mr Edwards said.
New houses purchased by first-home buyers jumped by almost 10 per cent and the proportion of first-home buyers in the market rose to 23.6 per cent in November, from 19.5 per cent in October, according to the figures.
Commonwealth Bank of Australia senior economist Michael Workman said rate cuts and the increase to the first home owner's scheme were "undoubtedly" restoring confidence.
Richard and Vanessa Searle's three-bedroom Jannali cottage was advertised for the first time last Saturday but already been inspected by 10 prospective buyers.
"The first homebuyer's market is certainly buoyant and that's kind of where our house sits - we've just outgrown it," Mr Searle said.
"There's a lot of doom and gloom about the economy but if you have reasonably secure job it hasn't been this good for a long time."
Opposition housing spokesman Scott Morrison said more than "short-term stimulus" was needed to reverse a 21.8 per cent decline in housing finance for new dwellings in 12 months of the Rudd Government.
Signs of weakness remain
The head of property research for investment company Advisers Edge, Louis Christopher, said there were other signs of continuing weakness in the housing market.
The stock of unsold houses in the major population centres is more than double the level now that it was during the peak of the property boom in 2005.
Mr Christopher said the overhang was particularly severe in southeast Queensland, where there were more unsold houses on the market than in Sydney, despite the population being 40 per cent smaller.
Mr Christopher said the rental market was also weakening. In both Melbourne and Sydney, the vacancy rate was 4.2 per cent, with investors struggling to find tenants for higher-priced property. It is still below 2 per cent in other capitals but is also rising, with an increased number of listings of property to rent.
The Housing Industry Association is seeking further incentives for investment property owners, such as doubling the depreciation allowance and incentives for investment in raising energy efficiency of dwellings.
A survey by the property consultancy Residex found that house prices slipped by 0.6 per cent, while unit prices fell 0.5 per cent in the December quarter.
