The New Zealand building and construction industry is facing a significant downturn, with a shrinking number of firms and a lack of confidence in the market. This industry, once a key driver of economic growth, is now struggling to recover from a pattern of boom-bust cycles. The latest data indicates a 7.8% decline in total construction activity in 2024, followed by a 4.1% drop in 2025, with a further 8.2% decline in the building work component. This trend is particularly concerning, as it reflects a broader economic slowdown and a lack of certainty in the market. The situation is exacerbated by rising costs, including materials and fuel, which are leading to delays and cancellations of new projects, especially in the commercial sector. The industry's future pipeline of work is uncertain, with many firms struggling to secure projects beyond the end of the year. This uncertainty is further compounded by the upcoming election, rising interest rates, and weak business and consumer confidence. The situation is so dire that some firms are liquidating, and the number of construction jobs has significantly declined, with many skilled workers moving to Australia in search of work. The industry's recovery is hindered by a lack of bipartisan agreement on infrastructure projects, with the previous government's projects being halted and axed after the last election, resulting in job losses and a loss of skilled workers. The construction sector is now an 'engine of annual growth' for the labour market, but the job ads data is at odds with the construction activity data, indicating a complex and uncertain situation. The industry's future is uncertain, with many firms struggling to adapt to the changing market conditions and a lack of confidence in the market. The situation is a stark reminder of the fragility of the construction industry and the need for a comprehensive and sustainable strategy to support its recovery.
