Where do we stand as a sector? Where do we go from here and how? Kiwi construction leaders take a look at the big questions.
‘Challenging times’ is a much-used phrase in 2026. And it’s clear to see why. But what does it mean in relation to the construction sector in Aotearoa? How is the industry navigating its way through the course of curveballs? Three of our industry leaders – Malcolm Fleming – Chief Executive, New Zealand Certified Builders Association (NZCB), Kirsten Magnusson – Chief Executive, Building Institute Aotearoa and Ankit Sharma – Chief Executive, Master Builders – share their thoughts on the challenges and their hopes for clearing the path ahead.
Let’s start with the positives
“There’s a real opportunity to focus on local solutions,” says Kirsten Magnusson, appointed Chief Executive of Building Institute of Aotearoa in September 2025.
“Many construction products are made from NZ-sourced materials. Timber items like framing, ply, MDF, LVL and cladding mostly come from NZ-grown forests. Concrete and masonry products like ready-mix, blocks and precast panels use local aggregates, cement and sand. Prepainted steel for roofing and cladding is made locally too.
“Locking in local supply reduces the risk of disruption and price escalation and keeps business activity within New Zealand.”
New Zealand Certified Builders Association CE since 2022, Malcom Fleming draws his attention towards the positives of the tradies doing the mahi. “What has impressed me over the past two years is that trade-qualified builders, like those I represent at New Zealand Certified Builders, have demonstrated considerable resilience.
“Their inherent craftsmanship has allowed them to take on more technically challenging renovation projects in response to new home demand slowing down,” he says.
“They have also stayed close to their projects and clients by virtue of being business owners who can strap on the toolbelt and add value to their clients through their technical knowledge and experience.”
While Master Builders CEO Ankit Sharma, appointed to lead his organisation in 2024, takes a wide lens approach to what he sees as the current upsides to our industry. He says, “Over the course of 2025, we saw confidence starting to edge back in parts of the country. We have been hearing from members that building enquiries were lifting in some regions, and while the recovery has not felt even, all in all you could say the sector has been moving in a more positive direction than what we have seen in previous years.
“There is capacity in the market at the moment, and the sector is well placed to respond as work returns.
Magnusson adds another element to the current pluses in the industry dish. “Tech adoption is another positive. We’re seeing AI and digital tools increasingly applied in project design, collaboration, and data management, which improves efficiency and project outcomes.
Adding, “And we’re no longer losing as many skilled people offshore, strengthening the workforce and capability in the sector.”
Our biggest challenges
“The main challenge currently is the global instability that has brought fuel, freight and supply chain pressures into focus, ultimately affecting confidence here at home,” says Master Builders’ Sharma. “That can make customers hesitant, even when the underlying direction is improving.
“The other challenge is that recovery is not uniform. Some regions have been finding their footing sooner, while others, particularly some larger centres, are still moving through headwinds. Even so, the overall direction feels more positive, and the opportunity now is to build capability and be ready to deliver as confidence continues to strengthen.”
NZCB’s Fleming says, “The conflict in the Middle East is causing some concern. Our members were starting to see some early signs of growth in residential construction - contracts were being signed and the workforce, particularly apprentices, was starting to expand again.
“Prices are beginning to increase in construction projects, but consumers, for now, are proceeding with projects, though consumer confidence in undertaking new projects will likely be dented until this disruption passes.”
For Magnusson, focus is on the cumulative effect of the multiple factors faced by builders and related business owners today.
“Fuel is more expensive, interest rates are set to rise, elections are on the horizon, and the government hasn’t pushed the spend‑more button,” she says. “The higher cost of fuel is likely to drive a significant ongoing downturn in work activity.
“Sourcing skilled people remains a challenge. If the government were to switch on some of the large health projects, would we have the workforce ready? Maybe not. Margins are set to tighten, and unfortunately, we’re likely to see more job losses and business liquidations.”
Choose a change
If our sector leaders could choose a change that could be made to positively impact the industry right now, what would that be?
For Fleming, it would centre around cohesion in construction. He says, “A coherent bipartisan approach to maintaining and developing New Zealand’s infrastructure needs, particularly in the vertical construction space. This must be underpinned by agreed project priorities being ringfenced to avoid the start/stop/value-engineer/re-start cycle that we are experiencing currently when an election delivers an incoming government.”
Magnusson also wishes to see a politically collaborative approach to the advancement of the industry.
She also has thoughts on a practical change to reduce pressure on contractors, saying, “Right now, contractors are being asked to carry high levels of cost and delivery risk, even as materials become harder to source, fuel prices rise, and workforce capacity is constrained.
“One impactful change would be for clients and government agencies to share risk more realistically with contractors, for example by including contract clauses that adjust for material and fuel cost fluctuations. This would reduce the pressure on contractors, make project costs more predictable, and help keep delivery on track.”
Sharma takes a wide view. “I would not point to one single change, because the biggest impact usually comes from how the full set of reforms land, and how well it is implemented on the ground,” he says.
“We are seeing the building system start to shift, and changes are underway that should make it easier to consent work, give more certainty around Building Code changes, and widen access to proven products. If these changes are embedded properly, they can reduce friction, improve certainty, and support better outcomes for both builders and homeowners.
“The focus is on making sure the system becomes more workable and less reactive. That is what will help the sector move faster with confidence, while still backing quality and good outcomes.”
Year-on-year
Compared to a year ago, how do our leaders feel the Kiwi construction sector sits? “I think we are in a better place than we were a year ago, even if the recovery is still moderate,” says Master Builders’ CEO Sharma.
“Residential consents are up 12% on February 2025, which is encouraging, and the second half of 2025 was stronger, especially in December. We are also seeing confidence improve faster than workload, and that is usually the first sign that the sector is starting to turn.
“One thing worth noting is that we have seen real progress at a building system level over the last year. Reforms to the way we consent should lead to efficiencies, a more predictable Building Code update cycle, and improvements to product access.”
Fleming reflects, “The New Zealand construction industry has reduced in size but has good capability to deliver on the gradual lift in construction activity.” He notes the findings of the December 2025 MBIE, BRANZ, and Pacifecon ‘National Construction Pipeline Report’ painting the picture of 2025 being the bottom of the economic cycle, with building activity forecast to steadily increase from 2026 to 2030.
“The industry entered 2026 seeing signs of an economic recovery getting underway, and our own internal NZCB data supported the sense of industry optimism being felt across the first two months of the year,” he says. “The Middle East conflict, associated supply chain issues and fuel cost increases however, have meant the mood of the industry has quickly shifted to being one of concern.”
Magnusson is unequivocal. “The sector is in a much better position than a year ago. We’re ready to ramp up for the larger commercial opportunities coming through, particularly in the health sector.
“While some regions still face workforce gaps, overall, the sector is stronger, and companies are better streamlined and prepared.
“Lessons learned from Covid-19 have improved our resilience and ability to pivot in a crisis. If inflation and interest rates stabilise, and we can have greater certainty around projects and supply chains, I think as a sector we would be positioned to be more efficient, innovative, and confident moving forward.”
She sums up the current mood of the sector as ‘subdued and cautious’. “There’s optimism for the future, but high fuel prices, supply issues, and rising costs are putting pressure on projects and creating uncertainty, which is also taking a toll on people’s mental wellbeing.”
On the horizon
By this time next year, what do these key Kiwi construction figures hope to see?
“That the Iran War is firmly in the rear mirror, with building product prices stable and consumer confidence restored,” says Fleming.
Magnusson adds to this, “I’d like to see global events stabilise and greater certainty around supply chains and costs. With that in place, projects can restart or become more predictable. Right now, the uncertainty is so widespread it’s creating doubt, but ideally, we’d have stable inflation and interest rates, and a clear path forward for the country.”
By 2027, Sharma hopes the Kiwi construction sector has ‘built a more durable and confident recovery’. “Where good businesses are not just getting through but are positioned to deliver strongly and consistently. That will come from lifting capability across the industry, so businesses can plan well, deliver reliably, and keep improving how they run projects as conditions continue to stabilise.
“A big part of that is the sector integrating AI and technology in practical ways, especially tools that help lift productivity. We have already seen members taking first steps to reduce admin, improve the quality of customer communication, strengthen estimating and planning, and make better decisions. If more businesses build that capability over the next year or two, it gives the sector a stronger foundation as confidence.”
With collaboration, continuity and collective strength as cornerstones of the construction sector’s foundations, together, we can build a solid path to forge a stronger future for the industry, and the professionals and the public it serves.
