Australian home-loan approvals climbed in September, capping the strongest quarter since the first three months of last year, before the central bank resumed raising interest rates to control inflation.

The number of loans granted to build or buy houses and apartments gained 1.3 per cent to 48,333 from August, when they rose a revised 1.1 per cent, the statistics bureau said in Sydney yesterday.

That was the third straight monthly advance and was higher than the median estimate for a 1 per cent rise in a Bloomberg News survey of 19 economists.

A recovery in demand for home loans, which tumbled for seven straight months through to April as the Reserve Bank of Australia embarked on the most aggressive round of rate increases by a Group of 20 member, may bolster economic growth.

Governor Glenn Stevens last week ended a five-month rate pause, boosting borrowing costs by a quarter-point to 4.75 per cent.

"Additional official rate hikes next year suggest house prices are likely to move sideways over the coming 12 months and the incentive to rush into the market will be considerably reduced," said Paul Braddick, head of property research and financial system analysis at ANZ Banking Group in Melbourne.

"Consequently, we expect growth in housing credit to fall to multi-decade lows in the year ahead."

The total value of loans rose 1 per cent to A$20.4 billion ($20.5 billion) in September, yesterday's report showed.

The value of lending to owner-occupiers gained 0.6 per cent, the report showed. The value of loans to investors who plan to rent or resell homes advanced 1.7 per cent.

First-home buyers accounted for 15.9 per cent of dwellings financed, up from 15.5 per cent in August and lower than 26.1 per cent a year earlier.

In a quarterly report released last week, the Reserve Bank said there had been "a welcome cooling in the housing market" and the "appetite for new debt also remains more subdued".

The report follows statements by the International Monetary Fund that Australian home prices may be overvalued by as much as 15 per cent. Gerard Minack, Sydney-based global developed markets strategist at Morgan Stanley, has predicted prices are overvalued by about 40 per cent.

The earlier drop in borrowing sped up after the start of last year's fourth quarter as the Government began reducing A$21,000 grants to first-time buyers of newly built dwellings.