The housing boom in Australia has slipped slightly in September after soaring in August - but not by enough to remove fears that the leap is unsustainable.

The September figures for buidling approvals, an index of how many new homes are being planned, showed a 19.4% fall from the month before.

The slide produced a sigh of relief among market-watchers, for whom August's breakneck 22.9% rise had been a startling wake-up call.

An interest rate increase from the current 4.75% now looks less likely when the Reserve Bank of Australia meets next week, but the evidence of over-heating is still there as investors, rather than prospective inhabitants, are driving the housing boom.

Doing nicely

The boom is of course not all bad news.

Construction companies are doing well, needless to say, but the banks too are thriving.

Not only is the housing rush increasing their income from mortgages and other major lending; the current low interest rates mean consumer borrowing is at a peak as well.

Within the past week, ANZ Banking Group said its second half profits rose 30% over the previous year, while Thursday brought news of a 20% second half boost to earnings at Australia's number two bank, Westpac.

Across the economy as a whole, Australia is growing at more than 4% a year.

Imbalance

But despite the step back in September, things still look dangerously like overheating, analysts warned, as housing credit still rose 1.7% in September for a 12-month gain of 19.3%.

"There is still work in the pipeline which will see housing contributing to growth in the fourth quarter and into the first quarter (of next year), longer than anyone had anticipated," said Kieran Davies, chief economist at ABN Amro.

With equities remaining in the doldrums, investors are piling into housing - but rents are falling and vacancy rates are rising, intensifying fears of a crunch to come.

Within the overall pull back, some sectors experienced much less of a correction.

Approvals for flats, for example, were down 28.4% in September - but had soared a massive 68.1% the month before.