Ballarat appears to have established itself as the "strongest housing market" in the state of Victoria over the last year and a half, a market watcher from Housing Industry Association (HIA) said.

During the October quarter, Ballarat recorded a gain of 20.1% in housing approvals, helping regional Victoria maintain its activity levels.

Geelong, Latrobe-Gippsland, and Shepparton were some of the other areas supporting good regional activity.

Melbourne, on the other hand, witnessed a significant decline in approvals, down by 31.2% from its peak in May 2018.

"Ballarat also outperforms against its own long-term average, up by 18.5% compared to 11.5% in regional Victoria generally, while Melbourne is down by 12.5%," said HIA regional director Fiona Nield.

Nield said a range of factors is driving the demand in Ballarat, making it an ideal place for investment. Its stable growth in housing approvals will be able to support its local economy in the coming months and impact its infrastructure and services, she said.

"Ballarat's affordability advantage over the state's capital, as well as its lifestyle and proximity, has driven demand for housing in the regional centre. Population growth since 2007 has been twice as fast as the preceding decade. Dwelling prices have been advancing rapidly and approvals have followed," she said.

On a national level, dwelling approvals fell by 8.1% on a seasonally-adjusted basis.

"The fall was driven by approvals for private sector houses. Private dwellings excluding houses also fell," said Daniel Rossi, director of construction statistics at the ABS.

In a previous Your Investment Property report, Property Council of Australia Chief Executive Ken Morrison said the decline in building approvals should serve as a warning for the government to take action.

"Housing construction is a key driver for the economy, and it has been slowing down significantly. This matters for jobs in the housing construction industry and the economic activity they support," he said.