Construction sales fall sharply, industry faces broad declines
The construction and manufacturing sectors experienced the largest sales declines among New Zealand’s 14 major industries in the June 2025 quarter, according to new business financial data from Stats NZ.
ASB reports total building activity declined 1.8% in Q2 2025, with residential construction down 2.9% as the sector continues to retrace from stimulus-driven highs. Economist Wesley Tanuvasa noted that, despite significant rate cuts, “the sector has taken longer than assumed to stabilise” due to headwinds like economic uncertainty, high build costs, and buyer caution.
Despite the slowdown, 33,879 new homes were consented in the year to July – virtually unchanged from the previous year. Stand-alone house consents rose 1.7%, while apartment consents surged 26%, mainly in Auckland. August listings were also up 9% year-on-year, with steady prices and lower rates encouraging spring market activity.
Construction sales and building activity decline
Construction sales fell by $720 million compared to the March 2025 quarter.
“Construction sales fell 3.1% in the June 2025 quarter, following a 0.7% rise in the March 2025 quarter,” said economic indicators spokesperson Michelle Feyen (pictured) in a Stats NZ media release.
Business financial data estimates operating income and expenditure for most market industries in New Zealand. All sales figures are seasonally adjusted but do not account for inflation or price changes.
“Building activity is also estimated by the value of building work put in place,” Feyen said. “Both measures are telling a similar story, with decreases in most quarters over the last two years.”
In the June quarter, construction sales reached $22.3 billion, while the value of building work put in place was $7.9 billion – about 35% of total construction sales.
“In the June 2025 quarter, construction sales were 11% lower than in the June 2023 quarter,” Feyen said. “The value of building work put in place decreased 14% over the same period.”
After adjusting for inflation, building activity volumes dropped by 18% over the two years to June 2025.
Manufacturing also feels the impact
Manufacturing sales overall decreased by 3% in the June quarter, totaling $33.4 billion. The decline was especially notable in industries supplying construction materials:
- Non-metallic mineral product manufacturing sales fell 4.9%
- Metal product manufacturing sales dropped 5.1%
- Wood and paper products manufacturing sales declined 3.2%
“Non-metallic mineral product manufacturing has the closest relationship with New Zealand construction sales, and both have trended downwards in recent quarters,” Feyen said.
She added that the production of cement, plaster, concrete, and related products makes up a large part of this industry.
Why this matters to mortgage advisers
A slowdown in construction and manufacturing can signal fewer new homes coming to market, potentially tightening housing supply and increasing competition among buyers. For mortgage advisers, this means clients may face longer wait times for new builds, more competition for existing properties, and possible shifts in lending demand.
At the same time, steady new home consents and rising apartment approvals – especially in Auckland – suggest ongoing opportunities for buyers and investors.
Advisers should monitor these trends to help clients navigate changing market conditions and make informed borrowing decisions.
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