'While the dollar is this high, forget a housing boom.'

'While the dollar is this high, forget a housing boom.'

When Reserve Bank governor Glenn Stevens says property prices aren't about to pop, then that's that.

Trouble is, they're not about to hop, either. What he didn't say the other day was that property will be a good investment any time soon.

In fact, only six weeks ago he was saying the Reserve had no intention of lifting home prices or seeing another bubble, a message that somehow missed the front page.

Property values have apparently stabilised, having fallen an average 5 per cent to 10 per cent from their peak before the GFC, which is far better than the sharemarket has done, as I'm sure you've noticed.

Incidentally, both markets seemed to be pretty much equally over-the-top back then, so shares must have since become the better value.

But that's academic while an overvalued dollar holds both back.

After allowing for inflation, low as it is, property values on average are still falling – and the way the dollar is going, will for a long while yet, except where subsidised first-home buyers are showing interest.

And goodness knows why the governor takes comfort in the fact that housing affordability has improved to where it was in 2002, a year notable for its unaffordability as property prices peaked relative to incomes and was exceeded only by a brief spell on the eve of the GFC, presumably the starting point for this improvement.

His other argument was that if we were going to have a proper property crash, then it would have been during the GFC and the moment has passed.

I'd say a better argument against a crash then or now is the continuing shortage of housing revealed by high rents and low vacancies.

Anyway, every time Europe takes a turn for the worse, which these days is all it ever does, the governor gets even more gung-ho about Australia's prospects. Guess that's part of his job. Indeed, the message from central banks everywhere is don't worry, be happy, because if things go bad they'll fix it.

Since the Reserve Bank is convinced the economy is strengthening, what it terms a "major financial event" – an MFE to you – would have to come out of Europe for it to cut rates.

That brings me to Spain, where, uh, a crash in property prices has undermined the balance sheets of its banks so they – the real problem – can't afford to buy Spanish bonds.

If this qualifies as an MFE and the Reserve was forced to cut rates again, then confidence in the global banking system would have been shot to pieces, which, I'm guessing now, wouldn't do much for property or any other values. For now the problem for property prices is that unemployment is rising. Or, to put it another way, while the dollar is this high, forget a housing boom.

Besides, it would require a borrowing binge – and that would be over the Reserve Bank's dead body.

Twitter @moneypotts