New Zealand's building and construction industry is facing a challenging period, with a notable contraction that shows no signs of immediate recovery. This downturn, which has been ongoing for a couple of years, raises concerns about the future of the sector and its ability to bounce back.
The Shrinking Industry
The industry's traditional boom-bust cycle seems to have taken a turn for the worse, with a significant downturn witnessed over the past two years. Credit agency Centrix's managing director, Keith McLaughlin, highlights the impact of various factors, including an upcoming election, rising interest rates, and a sluggish housing market.
The numbers paint a stark picture: a decrease in the number of building and construction companies, with a notable drop in the construction of multi-family dwellings. McLaughlin attributes this to the housing market's performance, where weaker prices and longer market times have deterred builders and construction firms.
Impact on the Housing Market
The latest Stats NZ data for the year ending June 2026 reveals a stall in the growth of private dwellings, with a mere 200-unit decrease. This slowdown in construction directly impacts the number of households, which has risen by 1.4% since June 2025.
Uncertain Outlook
QV quantity surveyor Martin Bisset shares a pessimistic view, stating that most participants at the annual quantity surveyors conference have no work pipeline beyond the end of the year. Bisset emphasizes the need for a solid long-term commitment to national infrastructure strategies, suggesting that New Zealand lacks consistency in this regard.
Certified Builders' chief executive, Malcolm Fleming, echoes these concerns, highlighting the devastating impact of a lack of certainty on the industry. He attributes the recent downturn to the war in Iran and the halting of projects designed and consented by the previous government.
Labour Market and Skilled Workers
The labour market within the construction industry has also seen its fair share of challenges. A significant decline in construction jobs in the year ending 2024 led to a large number of people seeking work opportunities in Australia. However, a turnaround began in November 2025, with a notable increase in construction job offerings.
The loss of businesses within the industry not only affects the current workforce but also the future pipeline of skilled workers. As Fleming points out, the industry is currently at the low point of the cycle, and an uplift in the cycle will require skilled workers to meet the demand for construction projects.
Rising Costs and Uncertainty
The industry is further burdened by rising costs, with materials and fuel prices impacting its performance. Fletcher Building, a prominent player in the building and construction products distribution and retail sector, acknowledges the impact of macro uncertainty and cost inflation on new projects, particularly in the commercial sector.
The industry's short pipeline of work and the upcoming election add to the uncertainty, making it difficult for contractors to plan and employ workers effectively.
Conclusion
New Zealand's building and construction industry is facing a critical juncture, with a combination of economic, political, and market factors contributing to its downturn. The industry's ability to recover and adapt to these challenges will be crucial for its long-term sustainability and the overall health of the New Zealand economy.
