"Two younger people with two babies came running out."
Ms Flynn's daughter who called the Fire Service, with appliances from Napier arriving as smoke billowed on to Kennedy Rd, which was immediately closed between McDonald and Jull streets.
The house was ablaze and the neighbour said: "It was all just so quick."
Three Fire Service appliances and crews from the Napier station were used to fight the fire, which attracted large numbers of spectators.
Crews were still at the scene more than an hour-and-a-half after being called but the fire was mainly extinguished, with firefighters involved in turning-over the debris, salvaging and ventilating the property.
The Fire Service confirmed the occupants had escaped safely.
Ms Flynn's daughter was, however, treated for smoke inhalation to which she succumbed while she freed her foster-pets from an area of their property nearest the blazing home.