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."
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% since June 2025, to 2,072,000, and 3% 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% 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% to $58.1b in 2024, from $63b in 2023, and another 4.1% to $55.7b in 2025.
However, the building work component weakened more sharply than overall construction activity, dropping 6.3% to $34b in 2024, from $36.3b in 2023, and another 8.2% 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% 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 July 9, 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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