Just 48,903 home buyers received approval for loans in August, a 2.2 per cent decline compared to the previous month, the Australian Bureau of Statistics said.

Economists had expected a one per cent fall.

The housing industry hopes that yesterday's surprise 100 basis point cut in the cash rate to 6.0 per cent by the Reserve Bank of Australia (RBA) - which was followed by 80 basis point reductions in mortgage rates by the four major banks - will bring a new lease of life to the housing market.

The RBA also cut the cash rate by a quarter of a percentage point in September.

Financial markets are predicting further rate cuts in the cash rate to five per cent by the end of the year.