The recent strong growth in demand for residential property should be kept in perspective and any talk of a bubble avoided, Reserve Bank deputy governor Malcolm Edey said yesterday.Edey said that over the long term house prices have grown at a slower rate than has the growth in household incomes. Speaking at Finsia's Financial Services Conference in Sydney yesterday, Edey said: "There are cycles. Demand for housing is strengthening. We should not be rushing to reach for the bubble terminology every time the rate of growth is higher than average."We have a low-rate environment for a number of reasons. One of the expected effects is that it stimulates demand and spending, and borrowing."We are seeing that working at the moment in the housing sector, which is an interest rate sensitive sector. These things are not surprising."We said that this is an area to watch but we need to keep that in perspective."Edey's comments came a day after the Reserve Bank cautioned banks not to drop their lending standards. And, earlier this week, the International Monetary Fund said banking regulators should consider additional measures to maintain financial stability, such as setting caps on mortgage loan-to-valuation ratios and deposit-to-income ratios.Speaking at the same conference, the chairman of the Australian Prudential Regulation Authority, John Laker, said APRA dealt with a similar situation a decade ago.Laker said: "The low-rate environment is part of rebalancing economic growth. But there are risks that can grow over time in a sustained low-rate environment."There is risk for ADIs [authorised deposit-taking institutions] that they do not fully understand the ability of borrowers to service debt when rates go back up."There is also a risk that institutions will lower standards to protect market share."This is not unfamiliar territory. We have been talking to ADIs about this. We are engaging with all our industries."In response to a question about the IMF report, Laker said: "We've used those tools in the past, we would be willing to use them [again] if necessary in the future. But there are a range of other actions a prudential supervisor can take before [having] recourse to macro-prudential instruments, and those tools really involve engagement with institutions across the table day by day."