Construction sector on track for 2026 recovery, despite falling revenues
Photo:
Supplied/ Unsplash - Josh Olalde
The construction sector's revenues are still falling, though the industry appears to be on on track for a recovery in 2026.
The 2025 Building Construction Report indicates the industry's total revenue fell 5 percent to $94 billion in the year ended March, from $99b the year earlier.
"This has affected construction sector workers, owners and suppliers," report authors economists Shamubeel Eaqub and Rosie Collins said.
"The outlook is improving, but there are lingering risks," they said.
Among the risks were global uncertainty, slowing net migration, and reduced government spending with the private sector still in recession.
"A recovery may not start until 2026, as there is still very little work in architects' offices, meaning these positive signals may take some time to flow through to new projects."
Construction activity, excluding price effects and adjusting for a growing population, was at the lowest level since 2019.
"The construction sector is reliant on a broad range of suppliers, with payments to suppliers taking up $65 billion or nearly 70 percent of all revenue."
New Zealand Chinese Building Industry Association president Frank Xu said the industry's outlook was positive with opportunities in housing and infrastructure, with a backlog of consented projects ready to flow.
The report estimates New Zealand has an infrastructure deficit of $210b, with an estimated $1 trillion of public investment necessary to build and maintain infrastructure assets over the next 30 years.
"When that next upswing arrives, it will come with both opportunities and familiar pressures-labour shortages, productivity demands, and the need to adapt to changing conditions," Xu said.
He said it was important to improve staff retention and increase training as 37 percent of workers in the sector have been in their job for less than one year.
The likelihood of workers staying longer was also low, with just 6 percent of workers in the same job for five years or more.
"While the sector is subject to cycles, the structural trend is one of growth," Xu said, adding there needs to be a coordinated approach to ensuring the resources were in place to meet growing demand.
In the meantime, construction sector credit defaults were up 14 percent from 2024, with company liquidations up 48 percent, according to credit bureau Centrix.
"However, this paints an overly gloomy picture," the report authors said, adding the total number of construction enterprises was down about 1,000 from 2024's peak of 81,900," the authors said.
"This is because closures are highly visible but new businesses starting are less so.
"There are encouraging signs of a bottom in the cycle.
"Lower interest rates and rising mortgage applications suggest a thaw in the economy."
Sign up for Ngā Pitopito Kōrero
,
a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
RNZ News
an hour ago
- RNZ News
Internet outage hits thousands in Auckland, Northland
One NZ said technical teams were trying to fix the issue. Photo: One NZ Customers of One NZ across Auckland and Northland have been hit by a widespread broadband internet outage. A One NZ spokesperson said 10,000 people were originally affected, but that's dropped to 1000 since. Technical teams were trying to fix the issue, the spokesperson said. Areas affected include parts of Whangārei, Magawhai Heads, Leigh, and throughout Auckland, including the North Shore, Te Arai, Onehunga, Avondale, and Birkenhead. More to come ...
RNZ News
an hour ago
- RNZ News
National and Labour deputy leaders go head-to-head on Morning Report
Carmel Sepuloni and Nicola Willis go head-to-head on Morning Report's weekly political panel. Photo: RNZ The National and Labour deputy leaders are set to go head-to-head on Morning Report's weekly political panel. You can listen live above, on our app or on the radio . So far this week, there has been plenty to discuss, including buildings, ferries, and a tit-for-tat on the economy. The government has kept its AA+ credit rating, with ratings agency Fitch praising both National and Labour's emphasis on fiscal responsibility . But on Tuesday, Nicola Willis said the reminder of fiscal responsibility was a "warning shot" to Labour. She accused Labour leader Chris Hipkins of pretending the country's debt servicing costs were not something to worry about, despite the bill reaching almost $9 billion a year. "This kind of fiscal innumeracy is dangerous for New Zealand," she said. "Every New Zealander will pay the price if a Labour-Greens government puts our fiscal reputation at risk." In return, Hipkins scoffed at Willis' assessment, noting Labour had not yet released its full fiscal plan. "Nicola Willis is speculating on what our policy may or may not be. We haven't set out a policy yet," he said. "We've got to see how much more damage she'll do in the next 12 months before we can do that." The government began the week with an announcement it will change the liability settings in the Building Act to a proportionate system, in which parties are only liable for the work they carry out. It is a change from the 'joint and several' system, where liability is shared between all parties, regardless of cost or responsibility. Details on consumer protections, including whether the government will require mandatory professional indemnity insurance or warranties, are still to be worked through ahead of the legislation's introduction. Labour has said it is broadly supportive of the changes, but wants to see more work around those consumer protections so homeowners are not left out of pocket. Also recently in the news has been the money spent on cancelling the Cook Strait ferry contracts . A final $144 million payout to Hyundai Mipo shipyards in South Korea brought the total cost to $671m. Willis cancelled the iReX project shortly after the coalition came into power, saying the budget had blown out. New ferries are not due until 2029, with the Aratere sailing its final journey. Sign up for Ngā Pitopito Kōrero , a daily newsletter curated by our editors and delivered straight to your inbox every weekday.
RNZ News
2 hours ago
- RNZ News
Electricity Authority to force generators to offer same prices to all retailers
energy politics 20 minutes ago New moves from the Electricity Authority will force generators to offer the same prices to every retailer. Octopus Energy chief operating officer Margaret Cooney spoke to Corin Dann.
