New Zealand's construction industry is facing a critical downturn as economic conditions worsen and new projects dry up. In a bid to stay afloat, many construction companies are slashing quotes by up to 50 percent, accepting razor-thin margins—or even losses—just to keep their teams employed and cash flow ticking.
The latest figures from the Building Research Association of New Zealand (BRANZ) paint a bleak picture. In February, construction sector liquidations surged 37 percent year-on-year, making up nearly a third (31 percent) of all business closures nationwide. This alarming trend highlights the fragility of the sector and the pressure many firms face amid rising costs, declining demand, and tighter access to capital.
Industry insiders warn that this “race to the bottom” on pricing is unsustainable and could lead to further instability, as companies risk underquoting just to win tenders, only to face cash flow crises during delivery. The slowdown is affecting both residential and commercial sectors, with developers putting projects on hold due to uncertainty and higher interest rates.
Some experts suggest that government intervention—such as targeted infrastructure investment or procurement support—could help keep the sector afloat during this downturn. Without it, more companies may fold, and skilled workers could be lost to other industries or overseas.
As the sector braces for continued turbulence, construction firms are being forced to innovate, cut costs, and seek out niche opportunities just to stay in the game.