New Zealand’s construction sector enters 2026 under strain, yet beginning to stabilise. The aftershocks of cost escalation, funding constraints and workforce shortages have forced a hard reset across the industry. What is emerging is a more deliberate market, disciplined and intent on rebuilding confidence.
Economic conditions remain delicate. Finance is tight and demand uneven, but indicators suggest stabilisation rather than another downturn. Recovery is beginning to take shape, though momentum is still restrained.
According to Hubexo’s Construction Outlook for 2026, the national construction pipeline is showing tentative renewal. Drawing on LeadManager and Analytix insights, the report tracks projects entering, blocking and exiting the pipeline across regions and sectors, revealing how risk, policy and confidence are shaping construction activity across Aotearoa.
What the Construction Outlook analyses
- Projects entering, stalling and exiting the pipeline
- Where delays and bottlenecks are forming
- Region-by-region performance across Northern Region, Central Region and Southern Region
- Sector-level trends spanning:
- Commercial & Hospitality
- Residential
- Community & Public Buildings
- Industrial, Infrastructure & Transport
- Energy & Resources
The data points to a cautious shift rather than a rebound. Early-stage project values peaked in Q1 2025, levelled through mid-year, and edged upward again in Q3. Industrial, infrastructure and transport projects accounted for 44% of total early-stage project value, with the Southern Region contributing the largest share.
At the same time, pressure remains evident in the pipeline. Deferrals fell to 0.9% in Q2 2025 before lifting slightly, while abandonment rates rose to 3.9% in Q3. Residential projects recorded the highest cancellation rate at 7%, highlighting the continued impact of cost and financing pressures on feasibility.
Looking ahead, construction commencements are forecast to strengthen between late 2025 and 2026, led by residential work, which is expected to make up nearly half the value of all starts. Energy and resources provides a steady secondary pulse, while industrial, infrastructure and transport add further momentum as projects move into delivery.
“Across New Zealand’s pipeline, stability is replacing volatility—but from a low base. Abandonment rates turned upward through 2025, and an early-2026 lift in commencements will ease back as the year progresses. The Southern Region is driving value, the Northern Region is driving commencements, and the industry is moving with a clear sense of caution heading into 2026”, Hubexo, President, APAC, Ashleigh Porter, said.
“The tension shaping New Zealand right now isn’t demand—it’s capacity. The need for housing, infrastructure and essential upgrades is undeniable, but labour, capital and delivery bandwidth are the binding constraints. That’s why leading firms are tightening feasibility and leaning on technology to remove friction.”
Industry sentiment: cautious stability, constrained delivery
Insights from Hubexo’s 2025 Sentiment Survey, alongside in-depth discussions with developers, architects, builders and industry specialists, reinforce a picture of cautious stabilisation rather than broad-based recovery.
The report examines:
- Project delays, margin pressure and cashflow risk
- Workforce constraints and delivery capacity
- Capital access and feasibility scrutiny
- Sustainability expectations and embodied carbon requirements
- Digital foundations and technology adoption
- The impact of government policy, both supportive and restrictive
Developers report recalibrating feasibility and pacing projects more carefully to match demand and funding conditions.
“Last year’s mantra across the industry was ‘survive until 25.’ Now it has simply become ‘survive until 26, thrive in 27’. The target keeps moving, and the uncertainty is the hardest part. Nobody can say with confidence when the bounce-back will come”, Generation Homes, Chief Executive, Craig Hopkins, told Hubexo.
Architects describe a market that remains active but increasingly shaped by affordability constraints and client caution.
“Confidence is the commodity most in short supply. Demand exists and capacity exists, but the key challenge is the cost equation. That is why we focus on efficiency and lean design while ensuring our solutions endure and provide long-term value”, Warren and Mahoney, Principal, John Coop, said.
Builders and subcontractors face the most acute pressure, navigating fewer tenders, thinner margins and persistent labour gaps, but report growing confidence as pipelines begin to firm.
“The real commercial risk heading into 2026 lies in cost movements. Pricing is currently tight due to oversupply and weak demand, but capacity has left the industry. It won’t take much additional demand to expose those constraints, with sharp upward pressure on prices the likely result”, Fosters, Director, Leonard Gardner, said.
Across the industry, collaboration remains essential. Risk continues to shape decisions at every stage of the project lifecycle, influencing how work is scoped, sequenced and delivered.
The lesson of the past cycle is clear. Improvement will not come through acceleration alone, but through discipline, coordination and better intelligence guiding execution.