A resurgent housing market has narrowed the rural-urban confidence gap.

The Westpac McDermott Miller regional economic confidence survey for December showed an improving mood across most parts of New Zealand, with eight of 11 regions showing regional confidence.

On Tuesday the quarterly survey of business opinion also showed a rise in business confidence, but only slightly, with concerns about business investment and profitability.

The gains in the Westpac survey were led by New Zealand's three largest metropolitan regions.


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Auckland and Canterbury - the two most pessimistic regions in the September survey - bounced back strongly.

"Gains in Canterbury and Auckland reflect the impact of rising house prices following a period of flat or falling house prices," Westpac chief economist Dominick Stephens said.

Stephens said while Canterbury's economy conditions "remain fragile in the post-earthquake recovery period, activity in both the services and manufacturing sectors are showing signs of picking up" while farmers were seeing stronger meat and dairy prices.

Confidence in the region, which was a net negative 2 per cent in September, rose 20 points to a net positive 18 per cent.

Auckland's confidence - which jumped 15 points to a net positive 14 per cent - may reflect improved global sentiment while "unemployment seems to have stabilised at low levels, in part because of elevated levels of construction activity, but also a tentative improvement in regional manufacturing activity".

Wellington's confidence plunged in September, but bounced back strongly in December, rising 14 points to a net 17 per cent positive about the region.

"Much of this is because of a re-energised housing market, evidenced in large part by a sizable pickup in house prices, ongoing government spending on the local economy, sharply lower unemployment, and still elevated levels of construction activity," Stephens said.


"That said, rising rents and ongoing issues with the public transport system are unlikely to have gone down well in the capital."

The most confident region of the country was Bay of Plenty, which climbed 19 points to a net 28 per cent positive.

"In part this reflects the impact of a highly successful kiwifruit season, with progress having been made in getting fruit into Europe and China," Westpac said.

Prices for kiwifruit are also robust. On Wednesday, Statistics New Zealand said kiwifruit prices hit an all time high in December of $8.27 a kilo.

Bay of Plenty knocked Gisborne/Hawke's Bay off as the most positive region, despite confidence climbing on the east coast of the North Island.

Gisborne/Hawke's Bay confidence rose 7 points to a net 27 per cent positive, which Westpac said likely reflected strong prices in the horticulture and sheep and beef sectors and a "red-hot housing market which has seen double digit house price growth and rising sales volumes".

Confidence did decline in two regions, with Waikato dropping one point to a net 10 per cent of the population being positive about the region's fortunes.

"Worries about how the Government's environmental policies might affect the dairy sector are likely to have skewed this result somewhat, while still low log prices are likely to be a cause for concern," Westpac said.

Southland meanwhile dropped nine points to a net 10 per cent positive, the fourth consecutive quarter that confidence in the region has dropped.

"This is likely to reflect a growing sense of unease about the possible closure of the aluminium smelter at Tiwai Point and concerns about what this might mean for the Southland economy," Stephens said, adding that environmental regulation was also likely to be a concern.

"That said, the Southland economy right now is actually in fine fettle, buoyed in part by an outperforming housing market, elevated prices for dairy products and an increase in service sector activity."