Consents climb, capacity lags
After several years of falling consents, rising costs and company failures, New Zealand’s construction market has stopped contracting. Approvals are up, relatively little is leaving the pipeline, and the total value of commencements is forecast to increase over the year ahead.
What has not recovered is the sector’s capacity to deliver. Hubexo’s Construction Outlook for 2027 finds a market in the middle of significant structural change, where financing conditions, workforce capacity and a busy legislative program will determine how much of the pipeline reaches site.
What the Construction Outlook tracks
The Construction Outlook follows New Zealand’s building and infrastructure pipeline from Q2 2024 at national, regional and sector level. Using project data from Hubexo’s LeadManager platform, it tracks projects as they enter the pipeline, stall through deferral or abandonment, and finally break ground. Data runs to Q2 2026, with commencement forecasts to Q2 2027.
This year’s report pairs that data with a nationwide Sentiment Survey and in-depth interviews with developers, architects, builders, consultants and specialists.
Larger projects lift the early-stage pipeline
Early-stage project values rose sharply in Q2 2026, rebounding from the previous quarter’s trough. Value grew faster than project numbers, reflecting a greater contribution from larger-scale developments.
Energy and resources accounted for approximately 37% of early-stage value, and industrial, infrastructure and transport 32%. Both sectors are underpinned by energy transition investment, long-term public commitment and institutional capital rather than near-term private feasibility.
The Southern Region was the largest contributor, accounting for around 51% of total early-stage project value. Industrial, infrastructure and transport contributed nearly 52% of the regional total, followed by energy and resources at almost 39%.
Little leaving the pipeline
Deferral and abandonment rates trended downwards through to Q2 2026, with every key region recording deferral rates below 1%.
The pressure that remains is sector-specific. Residential continues to record the highest deferral and abandonment rates of any sector, while sectors supported by public, institutional or strategic investment are showing greater continuity.
Commencements forecast to rise
The total value of commencements is forecast to increase across Q3 2026 to Q2 2027, with some fluctuation between quarters.
– Residential is expected to be the largest contributor at approximately 38% of commencement value, supported by continued demand for new housing.
– Industrial, infrastructure and transport follows at around 23%.
– Energy and resources is expected to contribute approximately 19%.
The Northern Region is expected to account for roughly 54% of national commencement value.
Industry sentiment: cautiously optimistic
Expectations for 2027 are cautiously optimistic. In Hubexo’s Sentiment Survey, 47% of respondents expect workloads to lift, rising to 51% among builders, while 39% expect conditions to remain stable.
Time upstream, money on site. Delays are the leading project challenge for developers (75%) and architects (76%). For builders, low margins lead at 74%. Market insecurity now ranks as the top financial pressure for all three groups.
Defending and investing. Maintaining the status quo is the leading focus for developers (50%) and architects (45%). Developers mapping projects beyond 24 months fell from 60% to 37%. Builders are moving the other way, with upskilling staff their top priority at 60%, followed by incorporating new technologies into workflows at 49%.
Cost and capital. Annual inflation reached 4.1% in June, and the Reserve Bank raised the Official Cash Rate twice, to 2.75% in September. Cost is now the leading barrier to technology adoption for developers and architects, while for builders it is changing established practices.
What industry leaders are saying
Delays are the dominant project challenge for developers, and market insecurity has become the primary financial factor affecting their businesses.
“Time has become one of the biggest costs in development. Every month a project is delayed through planning, consenting or infrastructure constraints ties up capital, increases financing costs and reduces feasibility. In today’s environment, certainty is often more valuable than speed”, Classic Group, Managing Director, Matt Lagerberg, told Hubexo.
For architects, the pressure is coming from the market they work in rather than the books they keep.
“We’re seeing some positive movement in parts of the market, but the market remains highly uneven… In this environment, opportunity is there, but it is increasingly selective. Practices need to understand where investment is moving, anticipate client needs and position themselves deliberately rather than relying on a general market recovery”, Studio Pacific Architecture, Managing Director, James Wallace, said.
Builders are carrying the financial consequence of a market that has stopped moving quickly but has not started moving cheaply, and many are investing in their teams through the trough.
“When the industry is at a low point, that’s the best time to hire. We’ve been able to strengthen our team, but my concern is what happens 12 to 18 months from now when activity returns… Finding efficiencies and bringing new people through will be incredibly important when the market rebounds”, Foster Construction Group, Chief Executive Officer, Warren Luxton, said.
2027: A question of capacity
The question for 2027 is whether the capability to deliver the pipeline is still in the country when the work arrives.
“New Zealand doesn’t lack projects, infrastructure need or policy intent… What the industry has lost is the firms and people to convert that pipeline into construction”, says Hubexo’s President APAC, Ashleigh Porter. “The businesses that address these pressures now will be best placed to turn emerging opportunities into sustainable growth.”
Download the full and free report here.