What to do about Auckland's housing bubble

Matthew Goodson recently authored the following article published by the NZ Herald:

Last week's article outlined how Auckland's housing bubble is creating large potential risks for the economy. 150 years of international evidence shows how housing bubbles dangerously interact with the banking system. The one thing worse than a bubble is having it pop, generating major loan losses for banks and negative wealth effects for investors.

Not only is Auckland housing creating risks for the future but it is crowding out business activity in the present via interest and exchange rates being higher than otherwise.

So, what should be done? How might the air be gently let out of the souffle without having it collapse? 

Read the full article on the NZ Herald here