The value of investment loans peaked in April 2015 at $9.4 billion, but in May was just $4.3 billion, according to Australian Bureau of Statistics data. That is lower than it's been since February 2009.

While the housing industry greeted Thursday's home loan figures as indicating a possible bottoming out in the market, BIS Oxford Economics economist Maree Kilroy did not expect investors back until 2021.

"First-home buyers will be the first to come back into the market, then upgraders and downsizers with churn of dwellings, and then investors," she said.

Investors needed more than interest rate cuts - they needed rents to increase.

"It's just not a conducive environment for investors to enter at the moment," she said.

The housing industry, though, points out that May was the federal election month with the prospect of a Labor win spelling the end of negative-gearing tax breaks for new investors.

And it was taking heart from the latest data on new-home buyers. The number of loans to first-home buyers increased slightly in May to its highest number this year, although still well down on recent years.

The Canberra picture was less buoyant, with just 139 first-home buyers entering the market in May, still trending down and 30 per cent down on last May (trend figures).

The value of investment loans in Canberra also continues to fall, although not as dramatically as nationally. Investment loans were valued at $102.7 million in May (trend), a 17 per cent fall since last May and the lowest level in three years.

Real Estate Institute of Australia president Adrian Kelly said investors had been driven out of the market by the caps on lending but he expected a faster bounce-back.

"The real problem for investors at the moment is the banks, because obviously banks tightened up their lending criteria considerably," he said. "Now that the Hayne royal commission is well behind us I suspect that's likely to change and we actually think we'll see some change from an investor point of view sooner rather than later - later this year."

Housing Institute senior economist Geordan Murray said investor caution was natural considering the uncertainty in the housing market and the election, and it was "certainly not likely in the near term that we're get back to the volume of investor activity that we saw at the height of the boom".

But there were signs of improvement since May in auction clearance rates and builders reporting more people through display homes and "cause to be optimistic". The data showed a modest improvement in the number of loans for building new homes.

In Canberra, housing supply was skewed heavily towards apartments, and Mr Murray said given the volume of apartments being built and no evidence of unsold stock or high vacancy rates, demand was strong. But he also pointed to the cost of buying a block of land for a free-standing house in Canberra, which he said was among the highest in the country at more than $1000 a square metre, making it very difficult for people to choose a detached house over an apartments.

Ms Kilroy said the softening in first home owner demand had plateaued and was now steady. Building approvals for owner occupiers were expected to bottom out at the end of this year, and increase again next year.

Buyers were still very cautious about buying off the plan, given the revelations about apartment defects, and the increasing difficulty getting mortgages. On top, there had been a big drop-off in land sales for new homes, and given the lag from approval to sale, activity was not expected to pick up there for at least nine months, she said.

BIS is factoring in one more interest rate cut before the end of the year.

Domain data last week showed Canberra homes taking longer to sell, with houses on the market for an average of 73 days in the three months to June 2019 was 73 - and as long as 164 days, or more than five months, in the Molonglo Valley.

In June, 51 per cent of houses sold at auction, but only 22 per cent of units.

Domain Group economist Trent Wiltshire predicted a turnaround in Canberra, with a 2 per cent increase in house prices by the end of the year, and 4 to 6 per cent next year - although lower growth in units.

Reserve Bank governor Philip Lowe, who has been pushing the government to boost infrastructure spending to protect the economy, met Treasurer Josh Frydenberg and Treasury officials on Thursday, where Mr Frydenberg reported "a really detailed and productive discussion about that pipeline of infrastructure spending - in particular, the projects that are underway, the timing of those projects, the funding of those projects".

He and the Reserve Bank had agreed to work together to ensure continuing investment, Mr Frydenberg said after the meeting, but he gave no more detail about what that might involve.