Total Australian dwelling approvals increased by almost 12% in June, driven by high-rise components, while detached home approvals fell for a second consecutive month, Westpac said on Thursday.

The surge in total dwelling approvals exceeded market expectations of 1.8% and Westpac's forecast of 3%, marking the strongest monthly gain in more than two years.

The total value of building approvals has seen an 8.4% increase over the past three months, with New South Wales, South Australia, and Victoria leading with annual growth tracking above a 30% year rate, while Queensland and Western Australia remain softer with growth rates below 20%.

The three-month growth in dwelling approvals remains negative, with the uptrend from late last year losing direction, but market conditions are positive, including interest rate cuts, firming home buyer sentiment, and easing construction sector capacity constraints.