Interest rate cuts have helped drive house values to record highs in almost every capital city across the country as Reserve Bank governor Michele Bullock warns it could take years to build enough new homes to meet strong demand.

As the RBA on Tuesday held interest rates steady, with signs it may only deliver one more rate cut over the next six months, data from Cotality revealed dwelling values rose 0.8 per cent in September or the equivalent of $18,215 on a median-priced home.

House values have risen to record highs across much of the country, driven in part by lower interest rates. Credit: Jessica Shapiro

In Sydney alone, house values increased 0.9 per cent to a record high of $1.55 million, up 5.5 per cent since the start of the year. In Melbourne, values rose 0.5 per cent to $9

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