The favourable housing market conditions have made it possible for many would-be buyers to break into the market. Will this urge regulators to tighten credit rules?

Tim Lawless, research director of CoreLogic, said the cheap mortgage rates, improving economic conditions, and a confident consumer sector have boosted the housing market over the past six months. In fact, dwelling values rose by 8.2% between September and March. On a monthly basis, Australian markets posted the fastest monthly growth in dwelling values since 1988.

What can regulators do to slow down this growth and ensure accessibility and affordability of the market?

"Through previous housing cycles, the factors that generally slowed the housing market were either rising interest rates, worsening economic conditions, or tighter credit conditions," Lawless said.

However, Lawless said the Reserve Bank of Australia remains "unwavering" on its position to maintain the cash-rate target at the historic low until the unemployment and inflation targets are reached.

"An unemployment rate low enough to create wages pressures and a stronger trend in inflation is still likely to be several years away, though, providing the justification for the stable cash rate outlook," Lawless said.

This means that short-term mortgage rates are not likely to rise soon. Lawless said the most likely factor that will slow housing conditions is a new round of credit tightening.

However, Lawless believes that a new round of macroprudential policies is looking increasingly a matter of when, rather than as a response to the housing market boom.

"Tighter credit conditions would probably have an immediate dampening effect on housing market activity, while continuing to let record low interest rates support the ongoing economic recovery," he said.