Policy measures aimed at restraining bank lending unveiled in recent days may be novel. Other facets of coordinated policy action are not novel, but more like a rerun of methods used at a time of runaway housing prices in 2003.In 2003, the Reserve Bank of Australia confronted a relatively weak economy following the dot-com bust while fretting over a runaway property bubble in Sydney.To combat it, the then Ian Macfarlane-led RBA set about popping the bubble without crashing the economy by launching a major jawboning assault on investors combined with a couple of short and sharp rate hikes. The RBA succeeded in doing a lot more damage to sentiment than they did via the actual monetary tightening. This mix helped mitigate the fallout.Significantly, this approach was based upon research by a tyro assistant governor, and head of the domestic markets department, one Philip Lowe. Several years earlier, when at the Bank for International Settlements, Lowe penned research arguing that bubbles ought to be dealt with up front, not afterwards, as was the orthodoxy under Alan Greenspan.Contrast that with today and we can see a parallel methodology being employed by the Council of Financial Regulators. Over the past few days we have had ASIC, the RBA and APRA all jawboning about the bubble, about household debt and about dodgy lending. They have also tightened macroprudential across a number of metrics. All three were at it again yesterday. More may be needed the regulators have said, the "more" left undefined. It could be more macroprudential methods, or the blunter old style methods. It took two hikes in 2003.Above all, at some point soon regulators are going to break investor psychology. With much of the media still bald-faced property spruikers the message may take more time to get through than in 2003, and because it's co-ordinated across regulators it may be a bit clumsier in execution.Also, the policy lever is macroprudential tools not the heavy hand of rate hikes, but Australia's financial regulators have the power to succeed.The subsequent 2003 Sydney bust was quite nasty in the mortgage belt, although overall it only stalled city-wide prices for a decade. As noted in MacroBusiness many times, the bust stalled the 'move-up ladder' as prices in outer suburbs fell and homeowners there could no longer use their equity to pay more for more expensive properties closer in.The market oversupply was then backfilled by immigration and mining boom related income growth for ten years. Credit was not rationed at any point.Regulators usually trust that 'something will come along' so they may be prepared to rerun the 2003 gamble for Sydney and Melbourne in 2017. It might work for a while as they bash investors but keep money loose.Republished from MacroBusiness.