INVESTORS are borrowing more as housing finance growth outpaces economists' expectations.

Australian Bureau of Statistics (ABS) information shows investment housing borrowing increased by 2.4 per cent in May, compared with the previous month.

Loans for owner-occupiers rose by a seasonally adjusted 2.2 per cent over the same period with 63,855 loans granted.

It was the eighth straight month of growth for housing finance and ahead of economists' forecasts of about a 1.3 per cent increase.

First time home buyers made up a record 29.5 per cent of loans in the month, pipping the previous peak of 28.6 per cent in April.

Re/Max Excellence agents Lyn Griffiths and Rohan Banning said property investors will play an important role in helping to underpin Townsville's real estate market next year when the affects of the first-home buyer boost dry up.

However, Ms Griffiths said investors and home up-graders were stirring up plenty of activity in the local real estate market lately.

"Over the past three months, we have dealt with many more investors and second-home buyers as opposed to first-home buyers," Ms Griffiths said.

"That activity indicates confidence in the long term outlook and also mirrors the fact that buyers are using low interest rates to snap up properties at competitive prices before the next wave of growth.

"While activity in the lower price brackets is bubbling, there's still plenty of sales and interest on homes priced from $400,000 to $500,000."

About 1600 new homes need to be built each year to meet growth in Townsville's population, which the ABS forecasted to increase by about 5100 people this year.

While the extent of Townsville's housing shortage isn't known, the Reserve Bank conservatively estimates that Australia faces a current shortfall of 40,000 dwellings.

Building approvals in Townsville recently soared to an 18 month high, but Mr Banning said it was not enough to meet expected future demand.

"Townsville's population has grown at three per cent, which is well above the Queensland average," Mr Banning said.

"Investment activity is crucial to ensure that there is enough rental accommodation available to meet the increase of new residents.

"Likewise, development activity both around the city and in the northern beaches will provide more opportunities for new residents to purchase or build new homes instead of pooling up for rental properties.

"Right now investors can benefit from very low interest rates, strong rental demand and the potential for rental rate increases in the future."