New Zealand’s construction sector is heading into 2026 in a period of reset rather than rebound and continues to sit in a slump. After several years of cost escalation, labour shortages and financial tightening, the industry is stabilising—but cautiously. The focus has shifted from chasing volume to operating with greater discipline, selectivity and delivery confidence.
Those themes were unpacked during Hubexo’s Construction Outlook Webinar for New Zealand, where leaders from development, construction, industry bodies and technology explored what the national pipeline is signalling as the sector looks ahead.
Panellists included:
- Guy Randall, Chief Executive at Wolfbrook
- Leonard Gardner, Director at Fosters
- Kirsten Magnusson, Chief Executive of Building Institute Aotearoa
- Ashleigh Porter, President APAC at Hubexo.
The discussion coincided with the release of Hubexo’s Construction Outlook for 2026. The report draws on Hubexo’s national project pipeline data from its LeadManager platform, a Sentiment Survey and industry interviews to track activity across residential, commercial and hospitality, community and public buildings, industrial, infrastructure and transport, and energy and resources sectors.
🎥 Missed the live session? The webinar recording is now available on demand via Hubexo
Sentiment: A reset, not a rebound
This year’s data points to a market finding its footing, not regaining speed. Volatility is easing, but confidence remains measured, as firms adjust to a leaner, more disciplined operating environment.
Early-stage activity has edged upward, driven largely by previously stalled projects being retested rather than new demand entering the system. The pipeline is narrower and more selective, with feasibility scrutiny intensifying, particularly across residential projects. Deferrals have stabilised, but abandonment rates remain elevated, underscoring the pressure on delivery certainty.
“New Zealand is not in a bounce-back period”, Porter said. “What we’re in right now is a reset. After cost escalation, labour shortages and tightening finance, the industry is being forced into a more disciplined operating model.
“The mood is cautious, but steady. Firms are consolidating rather than expanding, and prioritising delivery confidence over growth for growth’s sake.”
Development: Selectivity, regional divergence and resilience
For developers, 2025 tested both strategy and stamina. Conditions remained uneven across the country, with clear regional divergence shaping where projects could realistically proceed.
Christchurch-based Wolfbrook continued to deliver through the downturn, but success within the residential sector is increasingly dependent on sharper due diligence, tighter product-market fit and a disciplined read on regional demand. Southern markets have shown greater momentum, while other regions remain highly price-sensitive and competitive.
Looking ahead, uncertainty around interest rates, policy settings and the election cycle continues to weigh on confidence. For developers, the challenge in 2026 is not demand itself, but managing volatility while holding teams, capital and delivery capability together.
“We’re trading through what is arguably the worst recession since 1991, and it just takes more work now—more due diligence, more analysis, more marketing, more focus on product-market fit”, Randall said.
“Demand is there, but it’s highly regional and extremely price sensitive, so you have to be sharper about where you play and what you deliver.”
Construction: Holding capability through the cycle
For contractors, the past year has been about endurance rather than growth, as procurement shifted toward tender-heavy models and away from the collaborative ECI approaches many builders rely on to manage risk and value.
Fosters, operating across the Waikato and Bay of Plenty, chose to retain its workforce through the downturn, treating people and institutional knowledge as long-term assets. While cost escalation has eased, particularly in industrial construction, Gardner warned that reduced industry capacity could quickly reignite inflation as demand returns.
The focus for 2026 for builders is on value creation through early engagement, transparency, and program-based delivery, particularly across government and institutional work.
“We worked incredibly hard in 2025 just to stand still”, Gardner said. “We made a conscious decision to hold our team together, because people and institutional knowledge are strategic assets.
“The risk is that capacity has left the system, and when demand comes back, cost pressure will return very quickly.”
People and capability: A fragile equilibrium
From an industry-wide perspective, 2025 was marked by pressure and uncertainty, particularly for businesses operating outside the top tier of the market.
With fewer projects flowing at any one time, workforce mobility and retention have become critical challenges. Capability is increasingly concentrated around large regional infrastructure and health projects, raising questions about how firms adapt as work shifts geographically.
For the Building Institute Aotearoa, the priority moving into 2026 is supporting leadership capability, maintaining sector-wide connection, and helping businesses navigate what is expected to be a “lumpy” recovery.
“For many of our members, 2025 was a year of pressure, uncertainty and survival rather than growth”, Magnusson said.
“With fewer projects flowing, retaining people and capability has become critical, especially as work shifts regionally and talent continues to leave the country.”
Innovation: Deliberate adoption over hype
Across the panel, technology was framed not as a cure-all, but as a practical lever in a constrained market. Interest in digital tools is high, but adoption remains uneven.
“What we’re finding is that digital capability isn’t a standalone role anymore, it runs across every career pathway”, Magnusson said.
“With AI we’re seeing materially stronger tender quality, tighter and more concise submissions, faster evaluations and quicker approvals but as always, the output is only as good as the input”.
Where uptake is occurring, it is most visible at the front end of projects: feasibility, planning and procurement, where predictability and risk reduction carry the most value. The emphasis is on tools that reduce friction, sharpen decision-making and support delivery certainty, rather than novelty for its own sake.
Porter said New Zealand’s approach to technology is pragmatic, with adoption driven by evidence rather than promise.
“Technology is no longer innovation for its own sake. It’s being used to respond to pressure”, Porter said. “Adoption follows proof, not promise”.