The Bay of Plenty is the most optimistic region in the country in terms of economic confidence, a new report has revealed.
And while at the Lakes end of the region, Rotorua is feeling the glow of a busy summer, business leaders say there are also challenges coming.
The latest Westpac-McDermott Miller Regional Economic Confidence survey showed a net 28 per cent of Bay households expected the region's economy to improve in the next 12 months, with the region topping the charts ahead of Gisborne and Hawke's Bay.
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The December quarter results showed a big jump in optimism, with three times as many people positive about the region's economic future than in the previous quarter.
Rotorua Mayor Steve Chadwick said the Westpac survey reflected a point in time and it was always good to see a lift in confidence.
"There is definitely ongoing activity in Rotorua but there are also challenges and our district housing plan and ongoing investment in infrastructure will be crucial to continuing to attract businesses, residents and investment that will provide district-wide benefits," Chadwick said.
"Many businesspeople, residents and visitors I've spoken to are optimistic and say there seems to be a lot happening in Rotorua."
Hospitality and tourism operators had been talking about a "very busy summer", she said.
Tourism operators told the Rotorua Daily Post last week the summer was shaping up to be the best season yet for the industry.
Chadwick said investment in the district was "very visible right now".
"That's with the likes of the lakefront and forest developments underway, the new Pullman hotel opening, demolition starting on the Rotoma No 1 inner-city development, additions to the Regal Palms complex well-progressed and the new commercial building at the lake end of Fenton St nearing completion.
"These types of developments provide work while under construction and potentially create new jobs once complete.
"So there is a re-shaping of our district underway but there's a balance we need to get right and that includes getting the right level of investment in infrastructure to support the district's progress.
Rotorua Chamber of Commerce chief executive Bryce Heard said results of the survey reflected a busy summer.
"The CBD was absolutely frenetic prior to Christmas," Heard said. "There's no other way to describe it."
He said while activity had quietened down since, the period was long and sustained.
Heard said dairy was showing every sign of firming up with talk of an $8 per kilogram milk solids price, which was "right up there".
"Deer is still firm, meat prices have been high, beef schedules have been way up – so farming has been pretty good.
"Forestry has hit a soft spot with the Chinese log market – but that's a phase, log prices are notoriously up and down. Tourism also appears to be going very well."
On the whole, things were looking good, Heard said.
OneRoof editor Owen Vaughan said there was a lot to be confident about within Rotorua's real estate market.
Vaughan said for homeowners, property values had steadily grown.
"In the last five years values have grown exponentially but, in the past year, Rotorua values have managed to hold their own and grow at a steady rate while, in other areas, things have gone downwards.
"Rotorua's closeness to Tauranga has benefited it quite substantially. It's been able to absorb a lot of the buyers who feel they have been priced out of the Tauranga market and are happy to commute from Rotorua to Tauranga for work."
Vaughan said Rotorua also had also seen a lot of economic activity that had managed to attract buyers to it and encourage people to set up in the city.
"Rotorua is no longer seen as the poor cousin to places like Taupō and Tauranga, but as an attractive place to live in its own right. I believe tourism has contributed to this.
"There are a lot of high-valued suburbs, and high-value properties that have seen some good sales, but there is also a high amount of affordable, first-home buyers stock and also new subdivisions that have happened which all adds to the positivity and isn't fuelled by speculation."
Westpac chief economist Dominick Stephens said the sharp rise in confidence in the Bay of Plenty reflected the impact of a highly successful kiwifruit season.
"Lower interest rates, rising house prices and a lift in construction activity, particularly in Tauranga, are also likely to have improved the mood," he said.
"That said, relatively weak log prices in this major forestry region will still be a cause for concern, although the impact on harvesting has been minimal."
The Westpac survey was conducted over the period from December 1 to 10, 2019.
- Additional reporting Zoe Hunter
Regional economic confidence (net confidence %)
Bay of Plenty:
Dec 2019: 28%
Sept 2019: 9%
Dec 2019: 27%
Sept 2019: 20%
Dec 2019: 18%
Sept 2019: -2%
Dec 2019: 17%
Sept 2019: 3%
Dec 2019: 16%
Sept 2019: 15%
Dec 2019: 15%
Sept 2019: 11%
Dec 2019: 14%
Sept 2019: 10%
Dec 2019: 14%
Sept 2019: -1%
Dec 2019: 10%
Sept 2019: 11%
Dec 2019: 10%
Sept 2019: 19%
Dec 2019: 2%
Sept 2019: 2%
Source: Westpac McDermott Miller
* Regional economic confidence reflects the difference between the percentage of
survey respondents that expect economic conditions in their region to improve and
those that expect prospects to worsen over the next 12 months. Sample sizes and
margins of error vary by region. The survey was conducted from December 1-10, 2019, with a total sample size of 1557.