Police detonated at least five blank explosions above the house and again called for the occupant to leave.
Officers were threatening to enter and search the house.
Fire Service staff are at the scene and on standby.
The home is across the road from Albany Junior High School, which has been locked down since about 11.20am.
Kristin School, which is also on Albany Highway, was put into lockdown about 1pm.
Police issued a statement saying they "wish to stress to parents that police have measures in place to ensure the safety of their children''.
Parents collecting children from school were asked to wait at police cordons until advised, Mr Raynes said.
"Parents collecting children at nearby schools are asked to be tolerant as there may be disruptions or road closures nearby.
"School buses will [be] redirected as soon as the operation is completed.''
"Students are in secure rooms and we will be awaiting further information from the police before any other action takes place," Kristin School said.
Albany Junior High School principal Mike Jackson said he had seen the police helicopter flying above the school and multiple patrol cars.
"Police have asked us to keep all students inside," he said.
"Students were just returning from morning interval [when we were put into lockdown]. It's starting to disrupt classes now but they're all relaxed and calm and safe and sound."
Inspector Peter Raynes said he could not comment on what had sparked the incident or whether anyone had been injured.
"The incident is still unfolding as we speak," he said.
"We've advised that the students should be kept inside and kept away from outside of the school at this stage.
"We've spoken to the schools and we've advised that there's a police incident occurring nearby and we've advised the schoolchildren to stay out of the area."
