Reserve Bank governor Glenn Stevens says he wants to make sure a housing price boom doesn't turn to a bust and stifle economic growth.
It should be possible to extend the current period of above average building activity for longer than the normal upswing, Mr Stevens said in a speech to the Committee for Economic Development of Australia in Melbourne on Tuesday.
"A high level of construction, maintained for a longer period of time, is vastly preferable to a very sharp boom and bust cycle," he said.
House prices have risen since 2011 and lending to households is rising, especially lending to housing investors, Mr Stevens said.
But these trends are not an immediate threat to the stability of the financial sector, and the resulting increase in housing supply is helpful, he said.
"So we don't just assume that all this is a terrible problem."
Even so, the pattern of price rises and lending growth "should prompt a reasonable observer to ask the question whether some people might be starting to get just a little overexcited", he said.
This was the background to the move by the RBA to work with other agencies, including the Australian Prudential Regulation Authority (APRA), to take a look at lending standards.
In early October, RBA assistant governor Malcolm Edey flagged an announcement by the end of this year about measures to rein in lending to housing investors.
Mr Stevens stressed that the mooted measures were not part of an attempt to restrain housing construction, but an attempt to stretch out the increased activity.
The measures would not be a return to the direct controls on lending of earlier years, when the price of credit was set too low, he said.
The current moderate growth in credit was evidence that interest rates were not too low at the moment, Mr Stevens said.
Low rates are "well warranted" on economic grounds, he said, with inflation under control and plenty of spare capacity in the economy.
"In such circumstances, monetary policy should be accommodative and, on present indications, is likely to be that way for some time yet," Mr Stevens said.
Economic growth had picked up outside the resources sector, where the investment boom is winding down, but it would be good to see some further strength, he said.
"There are sufficient spare labour resources such that we could probably enjoy a couple of years of non-mining sector growth somewhat above its trend rate before we needed to worry too much about serious inflation pressure," Mr Stevens said.