Mr Medcraft said the heated property markets in Sydney and Melbourne have the characteristics of a bubble, according to Fairfax reports.
Of specific concern is the SMSF sector, Mr Medcraft said, and warned investors against borrowing to invest in the current market.
While the current interest rate environment is clearly fuelling investors’ appetites, he stressed that rates will not stay at these historic lows for the long term.
"History shows that people don't know when they are in a bubble until it's over,” Mr Medcraft said.
"There is always danger when rates get so low. That's when people start borrowing when they can't afford it. What generally happens is rates start to rise, which affects your ability to pay, and rate rises can actually bust a bubble so you end up with a double whammy," he said.
ASIC is continuing to target SMSF property spuikers through the SMSF Taskforce, and recently stressed that property spruiking is the “largest concern” facing the SMSF sector.
Earlier this year, ASIC ordered former company director Steven William Hill to stand trial on fraud charges after an investigation found he recommended investors set up SMSFs for property investment.
Further, ASIC has been pursuing the founder of the Charterhill Group of Companies, George Nowak, announcing in March this year that it has banned Mr Nowak from providing financial services until 3 July 2017 on the basis that he is an undischarged bankrupt.
At the time, ASIC stated it is continuing to investigate the conduct of Mr Nowak and the activities of the Charterhill Group, which operated as a 'one stop shop' and with advice to clients including the establishment of SMSFs and the sourcing and purchase of investment properties.