The Reserve Bank is warning of "very concerning" developments in Sydney's property market, where house prices are still running ahead of other capital cities despite the efforts of regulators last year.

It has also admitted that Australia's unemployment rate will rise higher than originally expected this year, while economic growth will take longer to pick up than anticipated.

A week after cutting interest rates to historic lows, Reserve Bank governor Glenn Stevens faced a House of Representatives committee on Friday and told them affordable housing has become a "major" social issue in Australia.

But he could not do much to bring house prices down, he said, because supply-side constraints had to be removed for that to happen and the Reserve Bank could not do much about them.