Meanwhile, Channel Nine says it'll rebuild The Block, a show that was perhaps the defining moment of the last runaway property boom. The day it reappears will be proof the market has peaked. Speaking of peaks, a University of Western Sydney associate professor, Steve Keen, has set out to climb Mount Kosciuszko, having lost a bet that property prices were going to crash.

Far from crashing, they took off. Oops. An unrepentant Keen says: "This latest house price bubble began when the government doubled and even tripled the first home owner's grant. Along with the decision to allow open-slather purchases of Australian properties by overseas buyers, the Rudd government lit a fuse under house prices." The weird thing is that each time the Reserve Bank has lifted interest rates since October, property values have risen. No wonder Stevens felt a few not-so-soothing words when everybody was half asleep might do the trick.

To set interest rates, the Reserve Bank pumps money in or out of the banking system by buying or selling government paper, known as open-market operations. What Stevens is doing is known wryly in the bank as "open-mouth operations", or scaring the wits out of potential borrowers so in the end it doesn't have to raise rates.

So far, this doesn't seem to have been any more successful than the rate rises in cooling the property market. Clearance rates at the first auctions following Easter were at record levels, volumes are high for this time of year and prices have continued to rise. No surprise there, considering mortgage rates of 9 per cent and more (about 2 per cent, or eight rate rises, higher than now) didn't hurt the last property boom, which had turned into a bubble before the global financial crisis hit.

Besides, the Reserve's open mouth is saying different things. Only a few days before Stevens' comments, his deputy, Philip Lowe, pointed out home loan approvals fell four months in a row. Make that five months, because February was down as well. Add tighter lending conditions by the banks as well as first-home buyers dropping out and, according to Lowe, "it is too early to tell whether these contrary signs indicate that some cooling in the property market is in prospect". Certainly if funding is drying up, you can't have a property boom.

The Commonwealth Bank, the biggest home lender, reports a pick-up in lending since March, which suggests that the financial drought might be breaking. Even so, those lost months must stop property prices rising some time soon. Yet the latest figures also confirm the most bullish sign of all for property, which is that nobody is building new houses. If fewer places are being built in what is generally acknowledged to be a chronic housing shortage, then the future would have to be very rosy for property prices.

Indeed, that very shortage could well explain why the Reserve is embarking on its open-mouth policy. It can't raise interest rates too far because it would send developers to the wall and nothing would get built.

"If all we end up with is higher prices and not many more dwellings, then it will be very disappointing - indeed, quite disturbing," Stevens said in November. I doubt he's disturbed but he must be disappointed. House prices rose an average 12 per cent last year. By March, two rate rises later, they were rising faster still.

The only other country where prices are rising as fast is China but then there's a connection there. What's new about this property boom is the demand from China, Hong Kong, India and other parts of Asia brought about partly by still-relatively-cheap finance but mostly by a change in the foreign investment rules the government slipped through in the middle of the global financial crisis.

Under the new rules, or Keen's "open slather", students on temporary visas can buy a property without having to gain approval from the Foreign Investment Review Board.

Their presence is obvious at auctions in areas near universities and tertiary colleges and newspaper reports are already appearing of how they are outbidding first-home buyers. You can see what's coming next: "Instead of taking our jobs, they're taking our houses." They're competing at the top end of the market as well, where they're up against returning expats, among others. Since statistics are no longer kept, nobody knows how much foreigners are buying.

But one thing's for sure. The rising dollar will make Australian property more expensive for foreign investors. As it will the sharemarket.

Speaking of which, property has always been a safe haven after serious sharemarket corrections and it seems this time is no different. So which is looking more promising: property or shares? The sharemarket has done a good job in getting investors back as well.

It rose three times as fast as property prices last year, suggesting it's the more likely candidate for a bubble. The stronger economy is good for both and rising interest rates bad.

Both are susceptible to the whims of foreign investors, especially in the case of the sharemarket and Wall Street, which has yet to face the day of reckoning when the US central bank starts raising, or more accurately reintroduces, interest rates, which are officially at zero. Neither, frankly, is cheap.

But there's one thing property has going for it that the sharemarket doesn't.

There's a shortage of supply, most obvious when you look at rents. Yields on property are higher than they've been for a long time and they're still rising, which gives them one over the sharemarket, where dividends were cut. By the way, the fastest-growing rental areas aren't where you'd guess. The best yields are in Darwin, then Canberra, while Melbourne is the lowest, according to rpdata.com.

Anyway, rents are up because of the falling numbers of first-home buyers, who are forced to rent instead, not to mention the impact of higher interest rates. Hang on, isn't that proof that housing is becoming less affordable?

Less subsidised, yes, thanks to the end of the first home owner's boost.

But not less affordable. Despite higher interest rates and rising prices, housing is the most affordable it's been in six years, says the chief economist at CommSec, Craig James. Although the median house price has risen 41 per cent since 2003, household disposable incomes have risen more - by 44 per cent.

Even so, the sharemarket looks a better bet for the next year or so than property. Especially considering that the banks are limited by the amount of funds they can raise in still-jittery offshore markets.

They'll be keener on funding the mining boom than topping up their bursting home loan portfolios. The slowdown in finance approvals must limit how high prices can go in the short term, especially at the bottom end of the market.

But looking two or three years out, it could be a different story. Certainly the financing squeeze can only exacerbate the housing shortage. More migrants are coming in but we're building fewer places for them to live in.

At the current rate of building approvals, it'll take a year to fill the backlog in Victoria and up to three years in NSW. So where share prices will be governed more by demand, wherever it might come from, for property the swing-wing is supply.

When supply is constrained, it doesn't take much more demand for prices to soar. Besides, real estate agents are better at spruiking their wares than stockbrokers. Case study

Property prices in the past three months have gone through the roof, so to speak. Amanda Gould, who is looking for another investment property, says she is being outbid by up to $40,000 at auctions.

And that's in Sydney, which is lagging behind Melbourne's price surge.

Amanda, a travel consultant at MP Travel, has become so adept at choosing properties she's even set up her own buyer's service. She's experienced the best and worst of property. Amanda bought her first unit when she was 18, only to be crushed by 18 per cent interest rates.

"I bought high but sold low," she says. Still, a six-year stint overseas healed the wounds and she was back in the market "with more money behind me".

She's since turned over half a dozen properties and currently has two, getting finance from "my mentor", her mortgage broker, Catherine Lezer at Smartline. She's not fazed by rising rates and can't see values dropping. "The market is very high but it's not going to tail off. A lot of people who are renting and paying more are desperate to buy," she says.

And when you're negatively geared, rising interest rates are also a bigger tax deduction. "I'm not really worried. I fixed around 8 per cent [two years ago] but rates then dropped so it wasn't the best thing to do. I might fix again if they get to 10 per cent but that would be a good while yet."

Amanda hunts out older places that need doing up within 10 kilometres of the city and in areas she knows. "They have to be easy to get to before and after work when we're renovating. My husband Lance is very handy." Top five financing tips

When buying an investment property, mortgage adviser Smartline has these five tips: 1. MORTGAGE INSURANCE ISN'T ALWAYS BAD

Lenders require mortgage insurance, which is expensive, to protect themselves when the loan to equity ratio is too high. While there are no benefits to an owner-occupier, mortgage insurance can help an investor by reducing the amount of equity that must be put up. You could buy two investment properties with a 10 per cent deposit and pay the insurance, rather than one with a 20 per cent deposit and no insurance.

2. USING A LINE OF CREDIT AS A WORKING ACCOUNT If you are negative gearing, consider using the equity in your home as a line of credit. This becomes a working account for the investment loan, covering the shortfall in cash.

The downside is that you're eating up some of the equity in your home, so this only works if the investment property has good capital growth. 3. PLAN AHEAD IF UPGRADING If you plan to make your home an investment property one day, only put in the minimum deposit initially and any remaining funds in an offset account.

"When you turn it into an investment property it still has a high level of debt on it for tax effectiveness and you have access to every available dollar in the offset account for the deposit on your new owner-occupier property," says the managing director of Smartline, Chris Acret. 4. NEVER PUT THE FAMILY HOME UP AS PRIMARY SECURITY

Don't use one property as collateral for a loan on another. "Having the properties stand alone provides a greater level of asset protection if something were to happen to the investment property or if it were drastically to fall in value. However, if you do need to cross-collateralise, use the family home as secondary security," Acret says. 5. CHOOSE THE RIGHT LOAN

Basic loans are the cheapest but professional packages have extra benefits such as discounted interest rates with a high annual fee. "Generally speaking, someone looking to have their family home and one investment property may be better off with a couple of basic loans while someone looking to acquire multiple investment properties may benefit from a professional package. Professional packages also tend to suit 'stand-alone' securities better."

