New Zealand's building and construction industry is facing a significant downturn, and the path to recovery appears uncertain. This industry, which has traditionally experienced boom-bust cycles, is now in a prolonged slump, with no immediate signs of improvement. The impact is widespread, affecting businesses, workers, and the overall economy.
The Shrinking Industry
The latest data paints a concerning picture. Over the past two years, the industry has witnessed a steady decline, with a notable drop in the number of building and construction companies. At the end of 2025, there were 551 fewer companies in operation, and this trend is expected to continue throughout the year. The housing market, a key sector for the industry, has been particularly affected, with builders and construction firms pulling out due to weaker prices and longer market times.
Uncertain Outlook
Industry experts and professionals are expressing their concerns. The lack of a solid long-term commitment to infrastructure projects is a major issue. Certified Builders' chief executive, Malcolm Fleming, emphasizes the need for bipartisan agreement on infrastructure to provide stability and confidence to the industry. The war in Iran and the resulting economic uncertainty have also played a role in the industry's downfall.
Impact on the Labour Market
The construction hiring market has mirrored the industry's decline. In the year ended 2024, there was a significant drop in construction jobs, leading many workers to seek opportunities in Australia. However, a turnaround began in late 2025, with a notable increase in job offerings. Despite this, the industry remains cautious, with many businesses unsure about their pipeline of work beyond the end of the year.
Rising Costs and Delayed Projects
The construction sector is facing challenges due to rising costs and macro uncertainties. Fletcher Building, a key player in the industry, has noted delays and cancellations of new projects, particularly in the commercial sector. This trend is expected to impact the group's performance in the first half of FY27. The rising costs of materials and fuel are also concerns, further hindering the industry's ability to recover.
A Broader Perspective
The shrinking building and construction industry in New Zealand is a complex issue with far-reaching implications. It highlights the vulnerability of an industry heavily reliant on economic stability and government commitment. The lack of a clear path forward and the industry's short-term focus on survival are concerning. As an industry that has the potential to drive economic growth, its current state is a cause for reflection and action. The question remains: How can New Zealand's building and construction industry be revitalized and made resilient against future economic shocks?
