Regulators are looking at measures to deal with the growing risk of household debt outpacing incomes.
New home loans where debt is at least six times greater than income rose to a record 22 per cent in the June quarter - up from 16 per cent a year earlier.
Australia's four financial regulators said in a statement on Wednesday they were "mindful that a period of credit growth materially outpacing growth in household income would add to the medium-term risks facing the economy, notwithstanding that lending standards remain sound".
"Against this background, the council discussed possible macroprudential policy responses," the Council of Financial Regulators said in their quarterly statement.
The Australian Prudential Regulation Authority will consult with the council on the implementation of any particular measure and plans to publish in coming months an information paper on its framework for implementing macroprudential policy.
The council - which includes APRA, the Australian Securities and Investments Commission, Treasury and the Reserve Bank - said despite COVID-19 lockdowns and delays in the economic recovery, the financial system remained strong and was "well placed to continue to support the economy".
"Members expect the economy to rebound as vaccination rates increase and restrictions are eased, although acknowledged the uncertainties."
Treasurer Josh Frydenberg, who attended last week's meeting of the council, said while it was good to see first-home buyers coming into the market, it was important to be conscious of the balance between credit and income growth.
"We've also got to be conscious of future risks building up in the system," he said.
"That is why (the regulators) are looking very closely at what particular levers they have at their disposal to ensure we maintain stability in our housing market."
He expected only a small proportion of the overall market to be impacted by any measures to prevent the build-up of future risk.
"To do something now means less is required later."
Shadow treasurer Jim Chalmers told AAP housing affordability was a major issue and was getting worse under the Morrison government.
"Labor supports the regulators looking at ways to ensure the flow of finance for housing is sustainable and appropriate," he said.
"There's an important potential role for these tools to play in the housing market."
Cameron Kusher, director of economic research at REA Group, said there was merit in the regulators waiting a little longer.
He said the fact that high debt-to-ratio lending had increased was a direct response to record-low interest rates - which meant people were prepared to take on a little more debt - and government support programs for first home buyers.
"Due to the incentives in place, first home buyers have financially stretched themselves to bring forward a purchase decision."
As well, the pandemic and lockdown restrictions had limited how and on what people spend their money.
"Coupled with the shift to working from home, home purchasers are dedicating more of their income to housing and less to other discretionary items," Mr Kusher said.
He said it was likely once lockdowns ended and the country reopened the housing market would slow.
"Waiting to implement macroprudential policy changes until lockdowns have ended will give regulators an opportunity to reassess the market once people are spending less time at home and the 'new normal' conditions are in place."
Australian Associated Press
