The strength and resilience of the banks' and household balance sheets - rather than indicators such as credit or rising house prices - are a key focus for the RBA, assistant governor Michele Bullock said.
Bullock told this morning's Bloomberg address on the risks facing Australia's economy since the global financial crisis that she personally would not speculate on a housing bubble.
"What we're really focusing on is to what extent are things like the growth in house prices and the growth in debt signalling about whether or not households have balance sheets that can withstand a downturn," she explained.
She added: "The other issue we worry about, in a systemic sense, is to what extent is there procyclicality in the prices of these things? Is there evidence that people have seen prices rise and they think prices will always rise?"
Bullock noted that the proportion of loans that are high loan-to-valuation ratios have fallen, which is something "positive," indicating more resilience in balance sheets.
"We're seeing things pick up again and that's why we're watching it very carefully and considering whether we might need to do more," she said.
In terms of lending practices, she continued, what an individual bank is doing "might look okay," but if a whole group are doing a similar thing, "it can have a very dramatic effect."
She said the RBA is making sure "banks are not over-extending themselves; not taking risks that in the event of a downturn would render them under water or that households would do the same thing."
Bullock also pointed to the recent investor housing growth that is starting to speed up again.
Investors can be the first to bail during a downturn, which could add procyclical concerns and is something the bank is watching carefully, Bullock said.