At the same time, it is evident that the current economic recovery has also been driven by nonmanufacturing activities (Chart 6). Looking at economic developments since 2012 – when the effects of the earthquake disaster mostly dissipated – the level of nonmanufacturing activities has continued to increase, while that of manufacturing activities has turned to a pick-up after having dropped.
We introduced a requirement that banks reduce their high LVR lending (defined as LVRs over 80 percent) to an average of no more than 10 percent of their mortgage commitments, and made this a condition of bank registration. The measure led to a significant reduction in high-LVR lending, a decline in house sales, and fall in house price inflation.