Dawn chorus: Buying frenzy fears

Fears (or hopes) grow of a house buying frenzy before the RBNZ reimposes LVR limits in March. Wellington approves 350 homes at Shelley Bay, but Christchurch pushes back against the densification NPS.

TLDR: The debate about the housing boom is raging. Both Stuff and NZ Herald lead this morning with fears (or should that be the hopes of the real estate ad sales departments and homeowning readers…) that the Reserve Bank’s March reimposition of LVR restrictions will unleash a buying frenzy before then. They also report the Reserve Bank is bouncing responsibility for the latest boom back at the Government.

July’s National Policy Statement stopping Councils from blocking six-storey apartment blocks near city centres is also now hitting Council chambers and the NIMBYs don’t like it. Christchurch Council rejected the NPS as ‘Auckland Rules’ overnight. The housing market pressure from all sides is intensifying.

Especially as the money printing pumping up asset prices is marching on. The European Central Bank hinted overnight it could print an extra €500b to €1.8 trillion. The Kiwi dollar has actually risen two cents to almost 69 USc in the last week because our central bank is viewed as not printing as fast as the others.

News this morning in our political economy

It’s all about supply: There was one step forward on housing supply overnight, and one step back. Wellington Council approved the Shelley Bay development after what it seems like decades of stuffing around. But Christchurch’s Council channelled the NIMBYs by rejecting the Government’s pro-density housing policy. The Press led this morning with the Council’s rejection of ‘Auckland Rules’.

It's about time we had this debate nationally. NIMBY boomers vs the next generation. And the next generation should win.

Bernard Hickey @bernardchickey

Now the 'intensification vs sprawl' fight is getting serious. The Press leading with this. Lianne Dalziel: “It does seem infuriating, particularly when over-intensification is a big issue for our residents & it is something we are committed to addressing.”

stuff.co.nzCouncil accuses ‘tone-deaf’ Government of imposing ‘Auckland planning rules’ in ChristchurchChristchurch’s leaders have slammed a new Government policy to increase housing density, one councillor describing the move as “horrifically tone-deaf”.

Bernard Hickey @bernardchickey

Great to see this development of 350 homes go ahead. But the grief and drama and delay shows just how hard it is for new housing supply to get over the NIMBY and vested interest hurdles with the RMA weaponising objectors. A veto-ocracy.

stuff.co.nzGreen light for Shelly Bay redevelopment after council votes 9-6 in favourWellington City councillors have voted 9-6 in favour of selling land for the $500m redevelopment, a move Mayor Andy Foster described as “sad”.

Tony Alexander argues the Reserve Bank should have immediately reimposed the LVRs. The RBNZ’s Geoff Bascand and Adrian Orr said yesterday they had to consult the banks first and that lenders would know they were being watched. We’ll see.

Bernard Hickey @bernardchickey

Tony Alexander is right: “They have basically signalled to anyone buying property that they should get it done before March comes round and the LVRs are reapplied. They have guaranteed the boom we have been seeing will go on throughout the summer.”

stuff.co.nzReserve Bank ‘guaranteed’ housing boom will continue over summer, economist saysEconomist says the Reserve Bank should have made a decision on how to reinstate the LVRs and done it right away.

Claire Trevett reports that Simon Bridges rejected the half-Finance role offered by Judith Collins. (NZ Herald-$$$)

Bernard Hickey @bernardchickey

'Collins clearly was not willing to sacrifice Bayly over Bridges, but equally did not consider Bayly himself was good enough to hold the full Finance portfolio. Collins could easily have achieved the same end by giving Bayly Infrastructure & Revenue' Fair

nzherald.co.nzClaire Trevett: Why Simon Bridges rejected Judith Collins’ reshuffle offer - NZ HeraldSimon Bridges was the best man for the job, but justified in turning it down.

News overnight in the global political economy

Just keep printing: The European Central Bank signalled overnight it would expand its money printing programme as second waves of Covid-19 lockdowns sweep across the continent. (CNBC) Meanwhile, OPEC slashed its oil demand forecast in another sign the global economy is struggling.

Bernard Hickey @bernardchickey

The ECB's Christine Lagarde hints overnight at more ECB money printing. Could rise another €500b to €1.8 trillion

cnb.cxLagarde warns against vaccine optimism and hints at more ECB easingECB’s Lagarde cautioned against an immediate economic impact from a Covid-19 vaccine, while giving more details about what the central bank is likely to do next.

News overnight in business and markets

Tech stocks bounced back overnight and the NZ dollar was solidly higher after our Reserve Bank was not as dovish as some expected. Here’s the latest numbers as of 7 am.

Chart of the night

Bernard Hickey @bernardchickey

I'm loving @henrycooke's charting action in this. Especially this really wobbly one. stuff.co.nz/national/polit…

Signs ‘o the times links

Bernard Hickey @bernardchickey

Our tax system is a machine when it comes to clipping the ticket on spending and PAYE. That's a good thing and will mean we come out of Covid-19 with much less debt than feared. If only we could do broad-base-low-rate on wealth too.

stuff.co.nz‘Amazon tax’ collects $95m in GST from international shoppingThe first year of New Zealand’s “Amazon” tax has levelled the playing field for local retailers.

Bernard Hickey @bernardchickey

This is useful from @stevekilgallon1 on how small contractors are missing out because of Govt favouring procurement from big multi-national consultancies.

stuff.co.nzGovernment’s rules ‘shut small Kiwi firms out’ of lucrative contractsSome “supplier panels” have been closed for up to four years, keeping Kiwi start-ups from valuable government contracts.

Thought leadership

Bernard Hickey @bernardchickey

Rob Campbell is rightly pushing hard on this. I don't see much sign of others joining in. ''Let me assure you that history will not absolve us if we do not take today.’’

stuff.co.nzSkyCity chair calls for end to ‘excessive’ CEO salariesHeavyweight chairman says big businesses must change their ways.

''There are still those in my sort of position, and some who are equity investors, who will assert that the sole responsibility of the company is pursuit of profit for the shareholders. That is not a view I share and if some shareholders or fellow directors want to remove me for having the belief and acting on the belief that my duty is rather to the company as an entity and to its full range of stakeholders, then they are welcome to try to remove me.’’ SkyCity Chair Rob Campbell

Some fun things

Bernard Hickey @bernardchickey

Most nights I get my belly laughs before trying to sleep by watching Colbert. This one was a doozy, and not for the political stuff. So much fun with the name of a Covid-19 treatment. youtu.be/6WhQjgy96hE via @YouTube

youtu.beRepublicans Are 0 For 10 In Lawsuits Seeking To Overturn Biden’s Election WinDonald Trump’s election lawsuits have been completely unsuccessful thus far, but that isn’t stopping top Republicans like Mitch McConnell, Bill Bar and Mike ...

Coming up…

Today - 10.45 am - Stats NZ to publish travel and migration data for September.

Today - 8.30 am - Sanford to publish full annual results to NZX, but it gave an early indication on Nov 5 of a 46% fall due to Covid-19.

Today - 10 am - Infratil will brief investors, analysts and media on its half year results and strategy in Wellington.

Today - 6pm - Epidemiologist David Skegg to deliver Frank Holmes lecutureon Covid-19 at Old Government Buildings, Lecture Theatre 1 in Wellington

Fri Nov 13 at 10 am - Business NZ-BNZ Purchasing Managers Index for October

Fri Nov 13 at 10.45 am - Stats NZ to publish rental price indexes for October.

Mon Nov 16 at 10.45 am - Stats NZ to publish wellbeing statistics for September quarter.

Sat Nov 21 - National Party AGM due to vote on re-election of President Peter Goodfellow.

Weds Nov 25 - 2pm - Reserve Bank to publish six monthly Financial Stability Report (FSR) . Expected to warn of re-imposition of high LVR lending limits from May 1, 2021.

Weds Nov 25 - Opening of Parliament for 53rd term, including swearing in of new MPs

Thurs Nov 26 - Speech from the throne in Parliament outlining Government’s agenda

Ngā Mihi

Bernard