Signs emerge that the building sector has weathered the storm

7 July 2025

By Ankit Sharma, Master Builders CEO 

The past few years have tested the building and construction sector: our business models, our resilience, and at times, our optimism.

Construction firms have weathered an extraordinary period of cost volatility, pipeline uncertainty, tight margins and rising insolvencies. According to Centrix, 730 construction companies were liquidated in the past year - nearly 50% more than the year before. The human toll behind those numbers means jobs lost, businesses having to make extremely hard decisions, and stress carried home. This shouldn’t be understated.

But there are now clear signs we’re entering a new phase of the economic cycle. One that still carries risk, but also real momentum. Now is the moment to move from just surviving, to delivering at a scale that secures the future of our sector, while also contributing to the country’s growth trajectory.

Glimmers of confidence

The latest ANZ Business Outlook shows business confidence rising sharply in June, with construction firms among the most optimistic. Residential construction activity expectations jumped to nearly 45%, and commercial construction sentiment has been in the black for 12 months now.

Consumer confidence is also recovering, aided by lower mortgage rates and stabilising house prices. In some parts of the country, these signals are translating into real activity. Queenstown and the wider Central Otago region, for example, are going hammer and tongs. Builders there are telling us they’re “as busy as we’ve ever been.” Local demand is strong. The local Councils in the region are supporting growth. Projects are progressing.

It’s not a nationwide story yet. But it’s a powerful indication of what’s possible when confidence, policy, and pipeline align.

What we’ve heard across the country

Over the past three months, Master Builders has been out in the regions, hosting a series of Constructive Summits to hear directly from our members. From North to South Island, the feedback has been consistent: green shoots are emerging, but the recovery remains uneven, and patchy in places.

In regions like Canterbury and Rotorua Lakes, consent activity is lifting. In others, particularly parts of the upper North Island, uncertainty continues to delay decision-making. Builders are seeing more enquiries, but they’re not always converting to work. Councils are still slow to issue the permissions that get projects moving. And many firms are hesitant to invest without a clear view of what’s coming.

Confidence is returning, but confidence alone won’t pay the bills. What the sector needs now is certainty and clarity.

Government policy is shifting and that matters

To the Government’s credit, Budget 2025 and recent announcements suggest they are listening and acting. The Investment Boost which allows businesses to immediately deduct 20% of the cost of new assets will help projects get off the ground.

And the proposed overhaul of procurement rules, if done well, could be a game-changer.

The economic benefit test being introduced which asks agencies to consider the broader value of awarding work to New Zealand firms is a long-overdue shift. It rightly recognises that every contract awarded locally supports jobs, skills, and capability that stay in the country.

But these gains must be matched by delivery. That means consistent procurement practices across agencies, contracts that share risk fairly, and smarter models that allow builders to bring their expertise to the table early not just compete on price alone. Our Pre-Construction Guidelines can support the sector in this area.

The path ahead: from potential to progress

The construction sector has a unique role to play in New Zealand’s recovery. Every school, hospital, house or transport upgrade we build is an investment not just in infrastructure - but in confidence.

If we get the policy settings right from procurement and planning to consenting, the sector will do what it has always done: deliver. With certainty comes investment. With visibility comes scale. With momentum comes growth.

The last few years have shown what our industry is capable of under pressure. What we need now is the space, and the partnership, to build through the recovery, not just wait for it. From what I’ve seen and heard across the country, the tide is turning.

Now is a smart time to build

For those considering a renovation or new build, the conditions are more favourable than they’ve been in some time. With more builders available, steady material costs, falling mortgage rates, and stabilising house prices, homeowners and developers alike can move forward with greater certainty.

Of course, some businesses may continue to face pressure. This is why tools such as the Master Build Guarantee are essential. For homeowners, this product offers the best peace of mind there is on the market. It provides homeowners protection for 10 years after the completion of their build, regardless of whether the builder is still in business.

The economic fundamentals are improving, and momentum is building. If you’ve been waiting for the right moment, this could well be it.