Demand for student rental accommodation was driving up the premium for inner-city property in Sydney, but housing affordability in Australia generally was manageable, says the head of financial stability at the Reserve Bank of Australia.

Luci Ellis told an urban planning seminar at Sydney University on Monday night that pent-up demand in Sydney and other urban centres for more medium- and high-density living had driven prices for all types of inner-city properties well above the national median.

However, people's ability to service existing mortgages had not changed much in the past 10 years. During that time, houses prices had fallen as well as risen, she said.

"Prices have risen faster than consumer prices, but they have not risen materially faster than household incomes," she said.