While New Zealand's construction sector has endured its share of downturns, law firm Dentons is hopeful for a pickup in 2026.
According to Brendan Cash, a Partner in Dentons’ Major Projects and Construction team, there are signs of positive recovery for the sector. Here are some of the key takeaways of his recent article in Dentons’ Contractor Magazine.
The Numbers
Dentons’ initial forecast of a better 2025, guided by lower interest rates and government projects, did not materialise. Construction companies continue to dominate insolvencies, and the BWS Quarterly Market Report for Q2 2025 shows a year-on-year increase in building companies going under.
2025 was also one of the worst years for construction workflows, even more than the GFC. This was reflected in GDP figures for the first half of the year, with quarterly growth of -0.9% in the June 2025 quarter and annual growth of -1.1% (June 2025 year).
Contrary to some predictions, the residential property market did not spring back as quickly as anticipated.
Legislative Changes
Despite the numbers, Cash noted that progress was made on legislative changes to improve performance in the sector.
· Local Government (Water Services) Act 2025
· Building (Overseas Building Products, Standards, and Certification Schemes) Amendment Act
· Self-certification scheme for plumbers & drainlayers
· Building and Construction (Strengthening Occupational Licensing Regimes) Amendment Bill
· Shift to proportionate liability, mandatory warranties & PI insurance
· Establishing the National Infrastructure Funding and Financing Limited
· Legislation to replace the Resource Management Act with two acts: the Planning Act & the Natural Environment Act
Infrastructure Progress
Cash also notes that some infrastructure projects have taken off recently. They include:
· The NZ International Convention Centre (NZICC)
· Auckland’s City Rail Link (opening 2026)
· Christchurch Parakiore Recreation and Sport Centre
· Wellington’s Te Matapihi Central Library
· Dunedin Hospital (due to start construction in early 2026)
· Construction of the Northland Corridor PPP and the Christchurch Men's Prison PPP
· Otaki to north of Levin Road project
· National Infrastructure Plan (to be finalised by the end of the year)
Looking Positive in 2026
Cash’s assessment of the year ahead is optimistic. The OCR has been reduced to 2.25% to stimulate the economy, and consent volumes are responding, with new dwellings consented rising 7.2 per cent in September 2025, following a 6.1 per cent rise in August.
Dentons has also seen a noticeable increase in projects going out to tender, a positive sign of recovery. Its assessment of the National Infrastructure Pipeline now shows planned future projects coming up to $275 billion across central government, local government, and the private sector.
However, Cash notes that the election cycle will introduce some risk, with pauses in investment decisions and an uneven recovery. Non-residential building work consented in the year to October 2025 was valued at $8.9 billion, down 4.7 per cent on the prior year. Dentons’ claims that even at reduced interest rates, construction companies will find it difficult to make the numbers worthwhile on some projects.
Key Takeaway
Overall, however, the signals remain positive. The need for infrastructure investment is not going away, and there is a forecasted continued focus on roads and transport, health, three waters, defence, and energy.
We can look forward to a better-functioning market ahead. But the transition poses real risks for construction companies, which must find cost-effective ways to protect their businesses.
Bonded NZ helps builders and contractors find the best insurance, warranties, and surety bonds that keep their best interests in mind. Whether it's a big or small project, our cost-effective options help them secure their projects at every angle.
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