"So this region, I would have thought, things may slow a bit but it may be one of the better performing regions going forward."
Stephens was in Hawke's Bay to address Napier City Council's regular business breakfast event, where he told a crowd at the Napier War Memorial Conference Centre that house prices were noticeably falling in Christchurch and Auckland, and things were starting to slow almost everywhere else.
At present this region's housing market was still in a purple patch of high house price inflation but it was a market that only picked up later than elswhere.
"My view is that you're the last people partying but the party is over.
"One of the reasons for local overperformance might be previous underperformance."
There was a long stable period before prices started to rise between 2015 and 2016.
He pointed out that a key driver for that lift in prices was a surprise drop in mortgage rates. That made houses more affordable.
"Going forward, my view is that mortgage rates are set to sit at their current level, or rise. So the cause of that house lift, is not going to be present going forward."
Rising mortgage rates could actually "be quite nasty" for the market.
Population growth was also slowing but the big one was that there was now a Government that had been elected with a mandate to slow the housing market.
"The Government is taking a range of actions aimed at slowing the housing market, and I think they will do it."
The introduction of a foreign buyer ban was also expected this year, which could lead to a "rush" to beat the ban, ahead of "a quite sharp decline" in house prices.
In New Zealand house prices were tightly related to consumer spending trends.
"What I'm seeing right now is that most businesses are quite positive but retailers are already starting to tell me that things are flattening off, and I've seen that in the data of electronic card transactions, they have levelled off. This is happening and I thing it's going to continue to happen."
That would slow the economy, he said.
Tourism however, was performing well, experiencing "really rapid growth", as the number of guest nights in Queenstown and Auckland were going backwards.
"That's an unmitigated positive going forward."
Despite positive export numbers, business confidence generally, was "miserable".
"Business confidence is not much higher than it was in the depths of the global recession."
Some issues bothering business included the Government's aim to make the country carbon neutral by 2050, which would include a carbon trading scheme.
"There's going to be changes to what we consume, therefore, for some businesses there will be opportunity, for some they will disappear altogether, and others will change the way they do things."
The rising minimum wage was also bothering businesses.
"We've calculated that will affect 20 per cent of the workforce directly, and 5 per cent of the workforce indirectly."
Although that had little effect on wage bills, some individual businesses would be impacted, leading to more automation - and overall, the unemployment consequence would be "about 8000 jobs that will disappear".
Slower population growth would restrict the increase in building activity in Hawke's Bay in the coming years.
The construction industry was also near capacity.
Construction would continue to grow but it won't grow as quickly as it had been.
Generally, while the national economy was "over the hill", it would be a case of "ageing gracefully", through a long, slow downturn, rather than a swift slump.
