Josh Frydenberg is in regular contact with the Reserve Bank of Australia and the prudential regulator over what is becoming a hot property market.
But he believes as price values go up, it gives people more faith in the economy and confidence to spend.
However, such enthusiasm failed to spill over into confidence in the past week, which dropped by its biggest margin since late March last year when the economy was first struck by the COVID-19 pandemic.
RBA governor Philip Lowe has warned lenders he doesn't want to see standards slip at a time of rising house prices.
Following Tuesday's monthly board meeting, Dr Lowe noted housing markets have strengthened further, with prices rising in most jurisdictions, while housing credit growth to owner-occupiers has picked up, with strong demand from first home buyers.
"Given the environment of rising housing prices and low interest rates, the bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained," Dr Lowe said.
Recent figures show house prices have grown at their fastest pace in 32 years, while home lending and building approvals are at, or close to, record highs.
"We do monitor it very closely," Mr Frydenberg told the Seven Network on Wednesday.
"But the fact that interest rates are historically low is giving an opportunity first homebuyers to come into the market."
Meanwhile, the weekly ANZ-Roy Morgan consumer confidence index tumbled 4.6 per cent.
ANZ senior Catherine Birch blamed the snap Greater Brisbane three-day lockdown in the run-up to Easter and the end of the JobKeeper wage subsidy.
"History shows that confidence tends to bounce back quickly once lockdowns lift so we should see confidence improve over coming weeks," she said.
"It's possible, however, that the end of JobKeeper on March 28 will have a more prolonged effect on confidence."
Still, a strengthening housing market is giving a boost to the construction industry, with new orders, employment and supplier delivers all hitting record highs.
The Australian Industry Group/Housing Industry Association performance of construction index climbed by 4.4 points to 61.8 in March, the strongest monthly result in the index's history.
"The already fast-paced improvement in the construction industry lifted another gear in March," Ai Group head of policy Peter Burn said.
"Employment grew at the most rapid pace in the history of the series and wages rose faster than at any time since the global financial crisis."
Australian Associated Press
