The Building Research Association of New Zealand (BRANZ) says the country´s construction sector remained subdued with low activity levels persisting through the first quarter of 2025. Large, publicly-funded infrastructure investment will hereafter shape the sector’s fortunes, and the current narrow pipeline of shovel-ready projects implies that a return to full activity levels is not imminent. Current forecasts, however, are for a return to growth in 2026.  Obviously, construction is one of the key consumers of steel. Meantime, the Rider Levett Bucknall (RLB) tower crane index released in April reported the number of tower cranes sighted across New Zealand had fallen from a high of 157 in Q1 of 2023 to 105 cranes at present – a significant drop of 33%. Steve Gracey, Auckland managing director and Oceania chairman of Rider Levett Bucknall noted in the company´s 2025 Report: “The New Zealand construction industry is currently facing significant challenges, reflecting broader economic and policy shifts.”

The commercial construction company, Naylor Love, which had a record nine vertical-build cranes in Auckland in Q3 of 2024, now has only one – a reflection of the difficulties facing the sector and which are creating a flow on effect to all suppliers. For the pipeline in place, there will be a focus in 2025 on the energy and resources sector, which is set to lead construction commencement values, contributing approximately 46% of the total. The Northern Region is forecasted to dominate what activity does come to fruition over this period, according to the RLB Report. 

While major infrastructure projects remain at subdued levels, some early signs of life are emerging in other areas. In the residential space, the number of building consents issued for new dwellings in New Zealand increased by 11% in March month-on-month but then fell away 16% in April. Notably, the annual average percentage changes in residential consents to the end of March reveal a 31% increase in Otago, a 4% decline in Auckland, a 20% decline in Greater Wellington, and a 23% increase in Taranaki.

For the year ended April 2025, Stats NZ says the actual number of new dwellings consented was 33,554, down 5.2% from the year ended April 2024. One of the noticeable shifts in the New Zealand housing market has been the rise in higher-density residential developments. Recent urban planning changes, including changes to zoning laws under the National Policy Statement on Urban Developments, have driven this trend. Nevertheless, the current low sales numbers of multi-unit dwellings will negatively impact on the future volume of such developments. Non-residential building consents rose 10.5% year-on-year, though this increase comes off a low base from the prior period. Growth was primarily driven by strong gains in the retail, education and office sectors, partially offset by a sharp decline in the health sector. On a 12-month rolling basis, the total value of non-residential consents fell by 7.2% compared to the previous year, with the approved floor area down 21.9%. Despite ongoing challenges in the sector, sentiment is beginning to improve. Industry feedback suggests that activity may strengthen in the near term, supported by a growing pipeline of government-led projects. Forsythe Barr Investment Services says it expects fast-track approvals, easing interest rates, and moderating construction costs to provide short-term momentum. Meanwhile, in more good news for the steel industry, New Zealand’s manufacturing sector continued to expand in April, according to the latest BNZ – BusinessNZ Performance of Manufacturing Index (PMI). The seasonally adjusted PMI rose to 53.9 which is up from the 53.2 recorded in March. This marked the fourth consecutive month of growth. BusinessNZ Director of Advocacy, Catherine Beard, said the April result continued a consistent run of expansion for the sector during last three months.

Elsewhere, the country’s first privately-owned building consent authority – Building Consents Approval – has been formed to speed up construction consenting. Among other things, it will address one area of the delay in bringing residential construction projects to commencement.  Last year, the Auditor-General found that only three of 67 councils were meeting the 20-day statutory timeframe to process consents. Building Consents Approval will focus on the consents for residential bulk house group builders, to free up councils to cover more complex consent applications. The effect of this initiative is yet to be measured but any progress in lifting activity levels in any area of the construction industry will no doubt be welcomed by a sector unlikely to see meaningful growth until 2026.

It´s all change at Fletcher Building. In mid-May, the company announced its Australian division will be dis-established as a standalone division and that its operating businesses will be integrated into two new trans-Tasman divisions. They are:

• Light Building Products. This will include most of Fletcher Building’s New Zealand building products businesses, now combined with Oliveri Australia, Iplex Australia, Laminex Australia and Fletcher Insulation. Hamish McBeath, previously chief executive of New Zealand Building Products, will lead this division.
• Heavy Building Materials. This will encompass Fletcher´s concrete-related businesses, the New Zealand steel businesses, and Australia’s Stramit. Thornton Williams, formerly chief executive of the Concrete division, will lead this division.

Fletcher Building’s other three divisions (Distribution, Construction and Residential & Development) and executive team roles remain unchanged.

Notwithstanding the cost savings and efficiency improvements that the streamlining of the Group is expected achieve, Andrew Reding, CEO and managing director of Fletcher Building, said: “Since our interim results, our businesses have seen no significant improvement in market conditions, with market volumes continuing to be challenging due to macroeconomic uncertainties and the lack of any material momentum in the recovery of New Zealand’s economy. Our businesses operating in the commercial and infrastructure segments continue to face reduced or deferred spending, partly due to recent weather events and reduced sub-division activity. Meanwhile, residential property sales also remain at subdued levels, reflecting lower levels of liquidity across the market.” So, tough times continuing.