Auckland's housing squeeze is hitting small and medium businesses and driving staff from New Zealand's biggest city, according to a new survey.
The overheated property market is being blamed for firms' inability to recruit and retain the required amount of staff.
One third of the firms in MYOB's latest Business Monitor survey say the housing market has sent current and prospective employees packing from Auckland.
Despite the Auckland market being strong within the small business economy, MYOB New Zealand general manager Carolyn Luey said if housing issues continued it could have dire effects on the wider economy.
"We are now seeing the Auckland housing crisis moving from what has been widely considered a residential issue into a business issue," Luey said.
"If the housing market continues to run unchecked local businesses looking to recruit staff are going to find it increasingly harder," she said.
"Without skilled staff businesses will be unable to grow and may even take steps to move out of Auckland or New Zealand altogether if they are not able to meet their staffing needs.
"Either way it is bad news for the New Zealand economy - as we have seen through the years of conducting the MYOB Business Monitor - the state of the Auckland economy has a swift flow-on effect to the rest of the country."
Business New Zealand chief executive Kirk Hope agreed that Auckland's housing issues were having an impact on small businesses.
"Small business is definitely feeling Auckland's growing pains. Businesses in Auckland already have a hard time finding sufficiently skilled staff, and housing costs make it harder," he said.
"While economic growth in the region can bring business growth, this is hampered if potential employees can't afford to live there.
"The issue of restricted land supply pushing up the cost of Auckland housing has a definite knock-on impact on small business."
Data reveals one third of Auckland small business owners' perception of the Auckland City Council has deteriorated since last year's election.
Auckland's housing issues needed to be addressed, Luey said.
This could involve revising the unitary plan, or helping investment with developers to create affordable housing, Luey said.
"I think it's really an issue that both local and central Government need to continue to focus on and have a range of coordinated solutions to make housing more accessible and affordable," she said. "At the end of the day small businesses need employees to help grow their business so it's pretty tough if you can't recruit people in the Auckland market."
Despite the knock-on effects of Auckland's property market, many small enterprises remain optimistic about the future, data shows.
Luey said this was due to small business owners having confidence in the economy.
While revenue results are down significantly in Auckland, the city's SME economy has a higher expectation of improved revenue for the next 12 months, underpinned by a greater level of current activity.
If the housing market continues to run unchecked local businesses looking to recruit staff are going to find it increasingly harder.
Forty two per cent of business owners believe the economy will improve over the next 12 months, down two per cent from September's survey.
Current economic activity in Auckland City is positive with businesses reporting more work booked or sales in the pipeline for the current quarter, data shows.
Despite Auckland's property market said to be hindering recruitment, Auckland firms were found to be more likely to hire more staff and increase wages compared to others spread throughout the rest of the country.
The survey found competition to be the biggest pressure point for many Auckland-based small businesses.
"They are seeing increasing competition and increasingly difficult to find new customers, and that's because the economy is quite strong," she said.
"The whole economy is relatively strong. From our data we can see that certainly Aucklanders are expecting revenue to increase over the next 12 months, but so is the rest of the country."
Luey said it was great that businesses had such a positive outlook on the economy and their business prospects.
"It is really great to see that small businesses are still confident that they can see growth in the next 12 months, and that's backed up by the fact that they've got strong pipelines over the next three months in terms of building sales."
During times of competition pressures, Luey said small business owners should keep an eye on their agendas, cash flow, and make sure they have the right tools.
• One third of firms say housing market has sent current and prospective employees packing from Auckland.
• One third of Auckland small business owners' perception of the Auckland City Council has deteriorated since election.
• Twenty five per cent of Auckland business owners say they expect to face competition in the coming year.
• Forty two per cent of Auckland business owners say they think the economy will improve over the next 12 months.
• Forty per cent of Auckland business owners say they their revenue will increase over the next 12 months.