So the risk weights are not designed to accommodate economic and social objectives – so that explains housing unaffordability, childhood poverty, health issues, and much of the ills that are on the increase in NZ. But as long as financial objectives are met (no coincidence record bank profits) then ‘she’ll be right Grant.’  And NZers have to buy over inflated house prices at twice what is necessary, creating billions of dollars in bubble equity. But as long as financial objectives are meet. I would appreciate any feedback from interest.co.nz posters on what these financial objectives might be and how they do not seem to be aligned with the economic and social objectives of the average NZer.
 

What a non-article. He doesn't answer the question of the title:-
Grant Spencer explains why the regulator might adjust 'sectorial risk weights' when 'house prices may be accelerating to unsustainable levels.
And his conclusion is:-
"Adjusting sectoral risk weights in this manner is not for everyday use and should be used under very specific conditions".
I guess you'd have to have worked in a Government Department or University to understand how somebody with such limited thinking - like Grant Spencer, could get rise to the level of deputy RBNZ Govenor.
 

This year is probably the last year in this cycle of house prices appreciation. Its not in New Zealand interest to push house prices any further.  If you have children of your own then the cost of them getting on the housing ladder is more expensive, so its better to have low price appreciation.  Secondly high house prices result in weak domestic demand ie weak retail, weak restaurant spending and lack of spending due to highly leveraged house holds.  Thirdly this house price appreciation is built on lack of supply, historical low interest rates and Western Nation Money printing.  When Europe, the USA print money and provide Cheap money to the rest of the world this creates bubbles. You can have a different bubble in a different part of the world. For example in Europe, USA stocks have risen substantly over the past year. Greece stock index have gone up more than 100%, China and Vietnam for example have overbuilt apartments and will take years to soak up.  What we need to remember is that in 5 or 10 years time at some point there will be a hugh collapse of the financial system.  I think first the USA dollar will have a currency crisis , massive depreciation, followed by a sovereign debt crisis. This could trigger the collapse.  For 2013 if you are looking after the kiwi saver funds in this country then I would reduce equities by 50% and just put into cash as we will soon within the next 6 months have a noticeable correction of 20% which is overdue.  The trigger will be poor corporate earnings or the USA fiscal cliff in May with taxes in 5 years time. Global interest rates are likely to rise regardless as inflation will kick in and oil prices are not going any lower.

"accelerating to unsustainable levels'"
According to whom?
Are the "experts" and regulators going to parting with their own cash to pay people they've wronged if it turns out the levels aren't particularily "unsustainable".

unsustainable is a market effect.  allow the risk to be exposed and the level will sort itself.
At the moment, with "inflation" chasing being used to destroy any effective growth of wealth (BTW - wealth _IS_NOT_GDP. GDP _IS_NOT_ wealth.  GDP is turnover!  wealth is what is left after net profit less tax and dividends and what is invested for future returns less cost of maintenance!!!).   As I was saying inflation chasing is destroying wealth in all other sectors of NZ, refusal to support manufacturing (and associated businesses) is destroying the NZX (you think it coincidental that the greater industrial age and the stock exchanges occurred about the same time?).  Information technolgy is niche. wages are taxed heavily, as are all sales, crippling the retail industry. Food is moving more and more towards commodity models, which always reduces profitability.  Any attempt at production of development is crippled by huge compliance costs, and constant interference and changes by local and central government making everything high risk, only surpassed by dictatorships and country in active war.  Flagrant efforts for the NZ government to squeeze out more tax/levy//incise money with weaker and weaker excuses.

The prices in Auckland are FAR from unsustainable.   They're rapidly becoming the only game left in town.  You don't fix a problem by legislating against it - it's never worked before and it will never work.  The underlying cause must be dealt with and then, and only then, will the symptom go away.   Allow wealth to be legal in NZ families, encourage manfacture and supporting industres back to NZ (and that means promoting many small brands to flourish and compete - but compete for best look, great product - not compete in having to drive each other out of town for the last remaining credit card backed dollar with the cheapest nastiest product).  That will give places that grow and produce, it will give jobs to average NZers', and NZ value add products to buy.  And that will give places for people to invest their money (rather than having to "squirrel" it away in the risk-avoidance place that is Auckland (et al) property.
 
Ask yourself, Would I like to shop at a small mensware place (like Rod & Gunn) for nice clothing, and have Swazi weekend gear?  Do I want a nice F&P dishdraw and local made shirts, and local produced produce to chose from (and actually be able to afford some "nice" cuts or choose to save some cash by cheap cuts for special things)  - as opposed to most NZer's who have to chase their budget for every advantage just to afford doctors bills, health, car bills.  Why in this day and age are most chasing lives of poverty??  
  vs  Shopping at the big red barn, getting whatever is cheapest at the food stores, buying imported goods just because they're cheap (and throwing them away when they don't last). everyone only having a small brand range to choose from because the distributor finds it easier and cheaper to buy bulk from few suppliers, and the manufacturer has little competition and less ethics so improves returns to shareholders by reducing the product lines as there's little competition.