Research group GFK said in its latest report that between January and July 2009, more than $2.8 billion was spent on the category representing a seven per cent increase over the same period in 2008.
The firm said that interactive games and toys in particular have experienced healthy value growth, with both categories up nine per cent.
The European research group said Australia is unique in that the toy retailers enjoy 'Christmas in July', with the annual July toy catalogue sales accounting for 20 per cent of total sales for the year, while Christmas accounts for 25 per cent.
The toy catalogue season was not quite as strong this year, with unit sales declining by 7.5 per cent. Value sales grew by just 1.6 per cent, indicating that consumers took advantage of retailer promotional activities and purchased toys at higher price points but in lower quantities.
Also contributing was the fact that consumers spent more time at home this year than in the past and this led to them "snapping up toys to keep their kids entertained, with outdoor & sports toys performing particularly well."
This resulted in pre-catalogue sales (January to June) growing 14.1 per cent compared to a growth for the same period last year of 4.6 per cent.
The firm predicted that the timing of Christmas Day falling on a Friday should help retailers maintain sales and estimated sales growth of six to seven per cent for the toy sector which includes gaming consoles and hand held gaming devices.