Credit agency warns industry recovery unlikely this year despite easing arrears
New Zealand's building and construction sector has continued to contract, with total construction activity falling 4.1% to $55.7 billion in 2025, down from $58.1 billion in 2024 and $63 billion in 2023.
Credit agency Centrix managing director Keith McLaughlin (pictured left) said a recovery is unlikely this year, citing an upcoming election, rising interest rates, weak business and consumer confidence, and a sluggish housing market.
McLaughlin said a large number of construction and building firms were liquidated over 2024 and 2025, leaving 551 fewer companies in the sector by the end of last year, roughly half involved in multi-family dwelling construction.
"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," he told RNZ.
There is a modest silver lining: arrears among remaining firms have begun to plateau, and in some cases ease, over the first half of 2026.
Pipeline concerns weigh on confidence
Industry sentiment remains subdued heading into the back half of the year.
QV quantity surveyor Martin Bisset said feedback from a recent industry conference was "far from positive," with most participants lacking a pipeline of work beyond year's end.
Certified Builders chief executive Malcolm Fleming (pictured right) pointed to policy instability as a key driver of the downturn, noting infrastructure projects previously consented under one government were axed after the last election, contributing to roughly 15,000 job losses.
"What we need is bipartisan agreement for infrastructure projects," Fleming said.
Mixed signals for lending conditions
For advisers, construction hiring and construction activity are telling different stories. Job ads are up 35% in the 12 months to March 2026, even as underlying construction activity keeps falling, a divergence that aligns more closely with a strong lift in building consents than with actual work under way.
Consent data explains why: Stats NZ recorded 39,087 new home consents in the year to April 2026, up 16%, with multi-unit dwellings driving more than half of that growth. Westpac senior economist Satish Ranchhod cautioned, however, that developers "were likely to remain cautious about starting new projects," pointing to rising fuel and material costs stemming from the Middle East conflict and tightening borrowing conditions.
That caution is already showing up in the numbers: the building work component of total activity fell 8.2% to $31.2 billion in 2025, and MBIE's National Construction Pipeline Report expects the broader sector to recover only to around $65.4 billion by 2030, just 3.8% above 2023 levels, suggesting any meaningful pickup in construction lending demand remains some years away.
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