New Zealand's building and construction industry is facing a challenging period, and its future trajectory is uncertain. The industry's traditional boom-bust cycle seems to have taken a turn for the worse, with a significant downturn over the past two years and no immediate signs of recovery. This has led to a shrinking industry, with a notable decline in the number of active construction and building firms.
One of the key factors contributing to this downturn is the housing market. When house prices weaken and properties sit on the market for longer periods, builders and construction companies tend to pull out of this sector, impacting the overall industry. The latest data from Stats NZ highlights this trend, showing a stall in the growth of private dwellings while the number of households continues to rise.
The impact of this downturn is widespread. Credit agency Centrix reports a large number of liquidations in 2024 and 2025, with 551 fewer building and construction companies in business at the end of 2025. This has devastating consequences for the industry's confidence and stability, especially as it was just regaining its footing after the outbreak of war in Iran earlier this year.
The lack of certainty and political stability is a major concern for the industry. Certified Builders chief executive Malcolm Fleming emphasizes the need for bipartisan agreement on infrastructure projects to provide the industry with the stability it craves. The cancellation of projects after the last election resulted in significant job losses and a loss of skilled workers, further exacerbating the industry's challenges.
The construction labor market is also feeling the effects. After a boom in hiring in 2023, the industry saw a significant decline in jobs, with many workers seeking opportunities in Australia. However, there has been a recent turnaround, with a 35% increase in construction jobs on offer in the year ended March 2026. Despite this, the industry remains cautious, with many contractors unsure about their pipeline of work beyond the end of the year.
The outlook for the industry is uncertain, with rising costs and macro uncertainties impacting new projects. 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. In the meantime, the industry must navigate the challenges of a sluggish housing market, rising costs, and a lack of political stability.
In my opinion, the key to the industry's recovery lies in addressing these underlying issues. Stabilizing the housing market, providing long-term commitments to infrastructure projects, and managing rising costs will be crucial in restoring confidence and encouraging investment. The industry's future depends on these factors, and it will be interesting to see how it navigates these challenges in the coming years.
