Nona
Pelletier
Senior Business Reporter
The New
Zealand building and construction industry has shrunk over
the past couple of years, with a full recovery unlikely in
the near future, according to latest data.
The
industry’s pattern of boom-bust-boom may have run its
course, given the significant downturn seen over the past
couple of years, with few signs of improvement.
Credit
agency Centrix managing director Keith McLaughlin said it
was unlikely to recover this year, with an upcoming
election, rising interest rates, weak
business and consumer confidence and a sluggish housing
market.
Business numbers shrink
McLaughlin
said a large number of registered construction and building
firms were liquidated in 2024 and 2025, though there had
been an improvement in credit arrears over the first half of
2026, which suggests those still in business were beginning
to better manage their debt.
Still, there were 551
fewer building and construction companies in business at the
end of 2025. About half of them were involved in the
construction of flats and other types of multi-family
dwellings.
McLaughlin said he thinks it comes down to
the housing market. “When houses are sitting on the market
for some period of time, and when the prices are weaker,
then quite clearly builders and construction firms are
pulling out of that sector of the market and perhaps going
into something else, but certainly not going into the
building of houses, flats and homes.”
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The downturn can
be seen in the latest Stats NZ data for the year ended June
2026, indicating there had been steady growth in the number
of households over a three-year period, while growth in the
number of private dwellings stalled.
The number of
households had risen 1.4 percent since June 2025, to
2,072,000, and 3 percent on two years earlier, while the
number of dwellings had fallen by 200 units to
2,124,800.
McLaughlin said the number of liquidations
was likely to continue through the rest of the
year.
“One thing we are starting to see is that whilst
liquidations and severe arrears remain quite high, the
number of businesses that are going into arrears at the
moment has actually started to plateau,” he said.
“If
anything, it’s falling slightly. So we are starting to see
some improvement in that sector.”
Outlook
uncertain
QV quantity surveyor Martin Bisset said the
comments from participants at the recent annual quantity
surveyors conference were far from positive, with most
having no pipeline of work beyond the end of the
year.
“I think, as a country, [we] are very bad at
trying to get going,” Bisset said, adding that there was a
national infrastructure strategy in place, but it needed to
be backed by a solid long-term commitment.
“I think
that’s where we have to be more solid, and say, look, if one
government has put something in place, we shouldn’t go down
and then knock it down the next.”
Certified Builders
chief executive Malcolm Fleming said the lack of certainty
had been devastating for the industry, which had only just
started to regain
confidence when the war
in Iran broke out earlier this year.
“That’s where
we’ve really fallen down in the last two-and-a-half years,”
Fleming said.
“We had projects that the previous
government had the industry design, in many cases consented,
ready to go to construction, and those projects were
halted.
“What we need is bipartisan agreement for
infrastructure projects,” he said, adding that a number of
those projects were axed after the last election, resulting
in about 15,000 job losses.
He said the loss of
businesses affected the future pipeline of skilled workers
as well.
“Because, as we know from experience, we’re
at the low point of the cycle. The moment there will be an
uplift in the cycle, and the jobs will be starting to come
through, and we’ll need skilled workers to be able to do
that work.”
Labour market
Construction hiring
also went from boom to bust in the year ended 2024, with a
significant decline in the number of jobs over the period,
which saw a large
number of people move to Australia in search of
work.
A turnaround began in November 2025 followed by
a 35 percent increase in the number of construction jobs on
offer in the 12 months ended March 2026, over the year
earlier.
SEEK described the construction sector as an
“engine of annual growth” for the labour market. However,
the job ads data was at odds with the construction activity
data, though did align with strong growth in the number of
building consents.
Still, building consents were about
intentions rather than activity.
The
numbers
Total construction activity fell by 7.8
percent to $58.1b in 2024, from $63b in 2023, and another
4.1 percent to $55.7b in 2025.
However, the building
work component weakened more sharply than overall
construction activity, dropping 6.3 percent to $34b in 2024,
from $36.3b in 2023, and another 8.2 percent to $31.2b in
2025.
The latest MBIE National Construction Pipeline
Report indicates the downturn bottomed out in 2025, with the
combined value of building and infrastructure work to
recover to about $65.4b by 2030 – an increase of just 3.8
percent on 2023 levels.
However, Bisset said most of
the industry had a short pipeline of work.
“Some
people say we’ve got work to end the year, but [are] not
sure what’s happening in 2027 yet,” he said.
“And for
contractors to say that, when they are trying to keep a lot
of people employed, that isn’t great to hear.
“So
yeah, look, it isn’t good out there, and some people are
saying that definitely the election has something to do with
it, because we don’t know what’s going to
happen.”
Costs rising
In a market update on 9
July, building and construction products distribution and
retail business Fletcher Building said volumes in its core
manufacturing and distribution divisions had improved,
though some of that was a result of temporary market
dynamics.
“Existing construction projects continue to
progress, supporting ongoing demand for materials. However,
macro uncertainty and broader cost inflation are leading to
delays in, and in some instances cancellations of, new
projects, particularly in the commercial sector,” the
Fletcher Building update said.
“If sustained, this
trend is likely to weigh on group performance in the first
half of FY27 [six months ending December
2026].”
Bisset said the cost of materials and rising
fuel costs continued to be an issue for the
industry.
“The optimism still isn’t there. People are
still very much waiting for that moment to say, look, we’re
going to kick start and get
going.”
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