Interesting Take on Cooling Down Housing Hot Spots

Australia and New Zealand are looking outside traditional monetary policy to do the same thing — cool red-hot housing markets in their biggest cites without hurting borrowers, banks and their economies — but they are following different paths.

The success, or not, of these experiments could prove critical to the outlook for interest rates in both countries, while offering a guide to other rich nations on how to manage housing booms when the broader economy still needs support.

The Reserve Bank of New Zealand is by far the boldest of the regulators, taking the radical approach of targeting only the Auckland housing market with restrictions on loan sizes and tougher capital requirements for lenders.