New Zealand's building and construction industry is facing a challenging period, and the signs point to a prolonged downturn. The industry's cyclical nature has seen a significant dip in recent years, with no immediate signs of a full recovery.
The Shrinking Industry
The data speaks for itself: a steady decline in construction activity, a shrinking number of businesses, and a lack of confidence among industry professionals. Credit agency Centrix's managing director, Keith McLaughlin, paints a bleak picture, citing an upcoming election, rising interest rates, and a sluggish housing market as key factors.
The numbers don't lie. There were 551 fewer building and construction companies in business at the end of 2025, with a notable impact on the housing sector. This downturn is further evidenced by the latest Stats NZ data, which shows a stall in the growth of private dwellings, despite an increase in households.
Uncertain Outlook
QV quantity surveyor Martin Bisset highlights the uncertainty surrounding the industry's future. The annual quantity surveyors conference revealed a lack of optimism, with most professionals lacking a clear pipeline of work beyond the end of the year. Bisset believes the country needs a more solid, long-term commitment to its national infrastructure strategy, suggesting a need for stability and consistency across governments.
Certified Builders chief executive Malcolm Fleming echoes these sentiments, emphasizing the devastating impact of the lack of certainty on the industry. He calls for bipartisan agreement on infrastructure projects, highlighting the job losses and the potential skills gap that could arise from the loss of businesses.
Labour Market Impact
The construction hiring boom of the past has given way to a bust, with a notable decline in job opportunities. This has led to a significant number of people seeking work in Australia. However, there are signs of a turnaround, with a 35% increase in construction jobs on offer in the 12 months ended March 2026. Despite this, the job ads data doesn't align with the construction activity data, indicating a disconnect between intentions and actual activity.
The Numbers Tell a Story
The total construction activity has fallen significantly, with a 7.8% drop in 2024 and a further 4.1% decline in 2025. The building work component has weakened even more sharply, dropping by 8.2% in 2025. The latest MBIE National Construction Pipeline Report suggests a potential recovery by 2030, but this is a modest increase of just 3.8% on 2023 levels.
Rising Costs and Delays
Fletcher Building, a key player in the industry, highlights the impact of macro uncertainty and cost inflation on new projects, particularly in the commercial sector. Bisset notes that the rising costs of materials and fuel continue to be a challenge, dampening optimism and delaying the industry's potential kickstart.
Final Thoughts
The New Zealand building and construction industry is facing a critical juncture. The data and expert opinions paint a picture of an industry in flux, struggling to regain its footing. The cyclical nature of the industry, coupled with external factors like rising costs and political uncertainty, creates a challenging environment. The future of the industry hangs in the balance, and only time will tell if a recovery is on the horizon.
