Here's my form guide for Melbourne Cup day.

The way I see it, such a great spectacle, where a nail-biting few minutes leave you on the edge of your seat, or perhaps on top of it, and fortunes are instantly changed, just can't be ignored.

Yes, it's amazing how at 2.30pm on the dot the market stops to see the Reserve Bank's decision on interest rates.

All right, so I was pulling your leg. The Melbourne Cup leaves you in a state of agitation as the race is run, while with the Reserve Bank it comes after it's over.

So what are the odds for Tuesday? And what's going to happen to house prices?

Riding the Reserve's colours – grey, I imagine – is Have Another Go.

A 0.25 percentage point rise is odds on because the Reserve has even more form than Bart Cummings.

Besides, the status quo's As You Were, trained by Treasury's Ken Henry and ridden by Wayne Swan, has been scratched.

The only other challenger, the 0.5 percentage point rise, riding Let's Get On With It, has a big handicap.

The Reserve doesn't want to frighten the horses, especially when it can just repeat Tuesday's rate rise next month in the December derby with Have Another Go's stablemate, Third Time Lucky, especially if the track conditions improve even more.

So the betting is that official interest rates will be at least half a percentage point higher by Christmas.

But these itsy bitsy rate rises won't continue for much longer.

And I don't mean the Reserve Bank will be done with. On the contrary, it's likely to step up the pace and has warned as much.

Well, not exactly in those words. But owner-trainer Glenn Stevens has said the Reserve wouldn't be "too timid" to tighten "in a timely way" since it had cut rates "rapidly".

So once we get into the new year, punt on the Reserve being, well, less reserved.

It wants a cash rate around 5 per cent, considered neutral by neither adding nor subtracting from economic growth.

Since it won't want to take all next year getting there, that suggests one or two half-percentage point rate rises as it moves from canter to gallop.

What would that do to home prices?

You can bet the Reserve has thought a lot about this. Only a few weeks ago Stevens warned our "very expansionary policy could result in the build-up of other imbalances in the economy".

Sounds innocuous enough, only "other imbalances in the economy" means a property bubble.

Which he's agin.

But home prices are already at a record in Melbourne, where they've been increasing at an annualised rate of about 25 per cent, and Sydney is only a head behind. Oops, should that be behind a head? Oh, never mind.

Since the September quarter, which included the last buying spree of first home buyers, prices have continued to rise judging by auction results.

It's as if, perversely, the last rate rise is stimulating demand.

Maybe it was the signal investors were waiting for – rates rising because property prices and rents are going up. That's just how they like it.

On top of a housing shortage, which is why rents are rising, we have record immigration.

That's why property prices have a way to go even if the Reserve Bank stops them bolting.