A top New Zealand banking boss cautions that rapidly rising house prices in Hawke's Bay are a brake on the region's thriving economy - meaning it "won't get much better".
Speaking to Hawke's Bay Today Westpac NZ chief executive David McLean said the region's rising house prices were "not healthy" for a balanced economy.
"It creates distortions. One of the things in New Zealand is it makes it hard for people on lower incomes to work where the jobs are. Auckland is the worst case but you are starting to see that in Hawke's Bay also."
Most importantly, for businesses, it meant savings were being put largely into the housing market.
"What it means is that all the money is being locked up in housing, whereas if they put savings into the sharemarket or a managed fund that money then gets recycled, and businesses that need capital get access to it. So, from my point of view it's quite a fundamental barrier to growth in the economy.
"The Hawke's Bay, which is a really innovative region with really well-performing industry sectors, is a prime example of that."
McLean said the business cycle in the region was now "peaking".
"Peaking just means it's not going to get much better than this - but we don't see any sudden decline."
However, with the local economy showing "positive signs", the bank was "putting its money were our mouth is" and bringing back its Business Growth Grants programme to provide accepted applicants with mentoring, cash grants for investment and a chance to go on a business retreat in Hawaii.
"We're really to keen to help small business break through into success."
Hawke's Bay businesses were urged to apply.
McLean was responding to results of Westpac's new "Grow NZ" Report that showed nearly one in two businesses in Taranaki/Hawke's Bay/Gisborne said they had seen positive growth in recent years – the highest result nationally in more than 1200 business leaders across New Zealand surveyed on mood and intent.
In Taranaki/Hawke's Bay/Gisborne, 49 per cent of business leaders said they had experienced positive growth, the highest result in any region surveyed. The national average was 35 per cent.
In Taranaki/Hawke's Bay/Gisborne, 38 per cent of survey respondents said they planned to expand in the next few years, the highest proportion in any region. The national average was 31 per cent.
"The biggest issues in the region were transport, No 1, skills and education, particularly finding workers with the skills and education needed, and then third, housing.
"I think in the Bay we have seen quite an influx of population and house prices rising. It's correlated a little bit to labour, in the sense that people say it's hard to find workers and workers find it hard to find accommodation."
Hawke's Bay Chamber of Commerce chief executive Wayne Walford said the report as a whole revealed there were "great opportunities" still ahead for the region.
"Young Entrepreneurs and SMEs are challenged by a lack of capital for development in skills and things like technology. Larger businesses that have access to capital for R&D are challenged with finding skilled team members but over all they want a work life balance, something Hawke's Bay offers in spades.
"This clearly has to be our biggest marketing opportunity once we get the water infrastructure right."
Walford pointed out that younger people did not see the uncertainty that older respondents did.
Napier MP and Minister for Small Business Stuart Nash said the survey confirmed anecdotal feedback he was getting, especially from small businesses.
"People are paying their bills and hiring is robust. There is a combination of other factors giving new impetus to economic development in the region.
"The big-ticket item, the billion-dollar-per-annum Provincial Growth Fund, will continue its rollout.
"In my portfolio, Small Business, we secured more funding in the Budget for encouraging the development of e-invoicing. This practice benefits businesses through faster payments and fewer transaction costs. Fewer invoicing errors help deliver better productivity and increases cash flow certainty.
"I am also pushing for large businesses to ensure they do not disadvantage small businesses through excessive payment terms.
"The forecasts for economic growth are around 3 per cent per annum on average over the next four years. The outlook for the economy is hugely positive."