Australian Bureau of Statistics data shows dwelling approvals for private sector housing rose 4.8 per cent, building on the 8.6 per cent jump in July.

However, approvals for homes other than houses, such as units, dropped 11 per cent in August. Apartments approvals are near eight-year lows.

Overall, building approvals fell 1.6 per cent in the month.

Even so, AMP Capital senior economist Diana Mousina expects residential activity is likely to be stronger compared to commercial construction over the next six months.

"Residential activity is more sensitive to interest rate changes than commercial activity and will benefit from the low interest rate environment," she said.

There is speculation the Reserve Bank could tweak interest rates again before long.

Despite the lockdown in Melbourne, dwelling approvals rose 1.8 per cent in Victoria, albeit dwarfed by a 33.8 per cent increase in WA and an an 8.1 per cent rise in Queensland.

Meanwhile, Tasmania recorded a 26.2 per cent decline in dwellings, while NSW saw a 14.2 per cent fall.

For houses, there was a 34.9 per cent jump in approvals for WA and a 13.9 per cent increase in Queensland, but Victoria fell one per cent and NSW by 0.3 per cent.

Commenting on the surge in WA approval activity, Housing Industry Association economist Angela Lillicrap said it is consistent with other leading indicators that show HomeBuilder and the state government's building bonus have stimulated demand or new homes.

"This surge lifts the number of approvals to levels last experienced in 2018," she said.

However, demand for home loans remained slow, notably among investors.

Overall, Reserve Bank figures showed total credit was flat in August, dragging the annual pace down to 2.2 per cent, the lowest rate in more than 10 years.

Housing credit for owner occupiers rose 0.4 per cent for an annual rate of 5.4 per cent, but for investors it was flat in the month to be down 0.6 per cent in the year.

Business credit fell 0.4 per cent in August, but was still up 2.9 per cent in the year, while personal credit, such as car loans, declined a further 1.1 per cent to be down 12.5 per cent annually.

Josh Frydenberg has flagged more people will be able to access finance from March 2021 in a plan to ease restrictions.

The treasurer believes it is essential more credit is made available to support the economy out of recession.

He says existing rules are overly prescriptive, costly and complex.

But ANZ economists said details of the planned changes are not yet clear.

"It is too early to say how much additional credit growth the changes could add. Furthermore, any proposed changes will still need to get through parliament before they can be implemented," they said.

Australian Associated Press