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Fears of further stoking house price inflation in Australia's big cities has made the RBA reluctant to cut the cash rate again, despite persistent sluggishness in the Australian economy.
Mr Stevens said he found the steep rises in property prices in Australia's biggest city "acutely concerning for a host of reasons, many of which are not to do with monetary policy".
Earlier in his speech, Mr Stevens signalled that the Reserve Bank remained open to a third interest rate cut his year, but also flagged serious doubts over its efficacy in anything but further pushing up household debt and property prices.
"Yes, I am concerned about Sydney. I think some of what's happening is crazy" RBA governor Glenn Stevens
"I think it's a social problem," he said in a Q&A session at a business lunch in Brisbane on Wednesday.
But policy could not be dictated by the Sydney market alone, Mr Stevens said. "Sydney's not the whole country. Prices in Brisbane are, I think, rising, but nothing like that pace," he said. "There's not much happening in Adelaide, in Perth they're probably falling.
"Canberra, there's not much happening and in regional centres across the country there's not much happening.
"So when you're devising that economic policy for the country, yes I'm very concerned about Sydney and I think some of what's happening is crazy, but we've got a national focus as well and that just increases the complexity."