Dawn chorus: Climate notes on LIMs

Nelson to put sea-level change risk notes on the LIMs of 4,000 properties; Greens call on PM to drop her self-imposed wealth tax ban; New vaccine 95% effective; Bitcoin bolts to record highs

TLDR: Morena. Nelson City Council says it will put notes on the LIMS of 4,000 coastal properties vulnerable to sea level change. The last time a coastal council did this (Kapiti Coast) there was a revolt by owners that ended up being overturned in the High Court. Christchurch Council also backed down in 2016 after a revolt.

The Government needs to move fast with its Migrated Retreat and Climate Change Adaptation Act, which is one of the replacements for the RMA, to deal with this issue and give the Councils some cover. It would also prevent a big moral hazard problem. Meanwhile, the banks and insurers need to start playing their part to make these properties unsaleable.

Elsewhere, Marama Davidson has called on the PM to change her ‘no-wealth-tax-in-my-political-lifetime’ stance in the face of the latest housing boom. In my view, a broad based and low rate land tax of (say) 0.25% on the unimproved value of land worth more than $50,000/ha would do the trick. It would reset expectations by lowering land prices overnight by around 10-20% and unleash land banked for future housing. It could be called a housing and climate infrastructure levy and hypothecated to infrastructure spending and/or debt to avoid the ‘no new taxes’ claim. However, Jacinda Ardern ruled this out before the last election…

This morning in our political economy

Bernard Hickey @bernardchickey

This will be explosive. Major ructions when it was tried on Kapiti Coast. Owners revolted and LIM notes were overturned in court. Hopefully this will be dealt with in a Migrated Retreat and Climate Change Adaptation Act. Big moral hazard issue to deal with

rnz.co.nzMore than 4000 Nelson City properties included in new sea level rise hazard indexThe council today released information that showed how coastal flooding could change under a warming climate, including a worst-case scenario of sea level rise up to two metres.

Bernard Hickey @bernardchickey

I reckon a simple broad-based and low-rate unimproved land value tax (eg 0.25%) with a high starting threshold of say $100k/ha would do the trick. Immediate 10-20% price reduction. Resets expectations. Unleashes banked land. But PM has ruled it out...

stuff.co.nzHousing crisis: Green Party urge prime minister to reverse ruling out taxing property wealthMarama Davidson says huge property price surge means Prime Minister needs to rethink her self-imposed block on taxing property wealth.

Bernard Hickey @bernardchickey

Useful Corelogic report, highlighting this: "Nationally, first-home buyers are only paying around $47 a fortnight to cover a mortgage compared with the cost of renting." At a mortgage rate of 2.5%...

stuff.co.nzFirst-home buyers on the riseThere are growing numbers of first-home buyers entering the market.

In the global political economy overnight

Bernard Hickey @bernardchickey

More great news. Pfizer reports just one person given its vaccine in trial of 43,000 got severe Covid-19.

reut.rs‘A special day’: End of Pfizer trial paves way for a COVID shot this yearPfizer Inc will seek emergency U.S. approval for its COVID-19 vaccine within days after final trial results showed its shot had a 95% success rate and no serious side effects, the drugmaker said on Wednesday.

Bernard Hickey @bernardchickey

Bitcoin jumped overnight to near its 2017 record high of US$18,000 each. This is what happens when central banks print US$27 trillion (around 100% of US GDP) in 13 years and are showing no signs of stopping.

reuters.comAnalysis: Another bitcoin bubble? This time it’s different, backers hopeWith bitcoin surging to the cusp of its 2017 all-time high, backers are hoping fewer frenzied retail investors means less chance of a crash this time around.

Signs ‘o the times news

Bernard Hickey @bernardchickey

Crazy section prices, but hopefully greater density (even in New Plymouth) will take the edge of land prices per square metre. That's what happened in Auckland after the Unitary Plan.

stuff.co.nzDesperation for empty sections in New Plymouth sees house removals and demolitions soarA shortage of inner city New Plymouth sections has seen a surge in house moving and demolition as buyers splash out hundreds of thousands on houses they never intend to live in.

Bernard Hickey @bernardchickey

The @ReserveBankofNZ has no choice but to inflate the housing market to stimulate. But the rich are spending less than usual. Trickle-down monetary policy's big problem? Much of the stimulus is just saved. Savings in banks up $18b to $200b in the last yr

stuff.co.nzThe Covid spending habits of the $100,000-plus income clubHigher earners still spending less than pre-Covid, Illion data shows.

Bernard Hickey @bernardchickey

In which BusinessNZ sides with hands-off Labour over interventionist National on the issue of telling the @ReserveBankofNZ to add strings to its cheap loans to banks to stop massive new lending to landlords.

rnz.co.nzBusiness leaders against National’s idea of imposing conditions on Funding for LendingBusiness leaders aren’t backing National Party’s call for the government to “rein in” the Reserve Bank and insist conditions be put around new funding.

Bernard Hickey @bernardchickey

Barfoot and Thompson's auction manager Campbell Dunoon said his litmus test for Auckland market was the performance of brick & tile cross-lease units. “That’s been my test. A couple of years ago, they were getting $750,000, now it’s more like $1 million.” oneroof.co.nz/news/38687

Longer reads and listens worth your time

Bernard Hickey @bernardchickey

When will the banks & insurers take the lead on vulnerable sea-side properties in NZ? I think financial markets & investors will soon be way ahead of voters & politicians on this and drive change. Disclosure regs & @ReserveBankofNZ scrutiny the key

stuff.co.nzThe Detail: What to do about coastal properties vulnerable to sea level rises - and who pays?Nearly 70,000 coastal properties will be uninhabitable in 80 years. So how can you go about moving the population of Hamilton to a different part of the country?

Coming up…

Fri: Nov 20 - Tauranga City Council will decide whether to ask for a Crown manager or observer after a damning report this week on its culture.

Sat Nov 21 - National Party AGM due to vote on re-election of President Peter Goodfellow. He has confirmed he will run again.

Mon Nov 23 - Stats NZ releases Retail trade survey for Sept quarter

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

Dec 1 - Landlords must include a Healthy Homes statement with any renewed tenancy agreement after this date. Landlords have until July 2024 to comply with new rules on heating, insulation and dampness.

Weds Dec 9 - Parliament rises for the year.

Mon Dec 21 - Tesla joins the S&P 500

Ngā Mihi

Bernard

PS: Great thanks to Clara Josephine on Instagram for this morning’s pic. Welcome suggestions and your own pics for highlighting. Just hit reply and attach and I’ll happily make you famous! And I welcome your ‘fun things’ suggestions too.

PPS: A fun thing

Bernard Hickey @bernardchickey

How do I get in on this lark? And is there an apprentice scheme for social influencers? Sounds like we need to pay a social influencer to encourage people to take the social influencer training course. Btw, this $30k would once have gone to a newspaper.

nzherald.co.nzGovernment spends $30k on social media influencers to woo young people into trades - NZ HeraldThe number of women taking up apprenticeships has doubled compared to last year.