How is construction activity tracking across New Zealand regions in 2026?

New Zealand’s construction sector continues to be shaped by highly local conditions. Across the country, regional outlooks are being influenced by different combinations of residential demand, commercial activity, council priorities, infrastructure funding, climate pressures and broader economic confidence.

The 2026 picture is less about whether there is work in the market and more about the quality, timing, duration and profitability of that work. Across the regions, positivity appears strongest where businesses have a clearer pipeline, more resilient demand drivers and greater ability to protect margin. Where projects are delayed, funding is uncertain or feasibility is marginal, business owners are understandably more cautious.

Current workloads are not translating evenly into future positivity

The data shows that businesses in the rest of the North Island are feeling the most positive about their current business performance, but that they are the only region expecting to be less positive in six months’ time. This may indicate that local businesses are busy now, but less confident that today’s activity will translate into a stable pipeline beyond the near term. Comparatively, businesses in Auckland and the South Island are expecting to feel more positive about their overall business performance in six months’ time. In fact, the South Island leads the forward work outlook, with continued development activity and demand in parts of the housing market.

Recent market commentary suggests that Queenstown’s property market is emerging as a clear outlier in New Zealand’s housing downturn. Strong demand from high-net-worth international and trans-Tasman buyers is sustaining development activity in the area. High price points, limited land supply and tourism-driven demand allow projects to remain financially viable despite elevated costs, supporting pockets of work in the area, even as the broader pipeline weakens. However, the South Island results should not be read as a Queenstown story alone. The region includes a mix of markets, from Canterbury’s more diversified construction base to tourism-linked areas where visitor activity and population movement continue to support demand.

“Queenstown’s property boom highlights a two‑speed construction market in New Zealand: While national building activity remains subdued, strong investor demand in the Wakatipu region is sustaining development. It offers short‑term relief for parts of the sector but also underlines that this resilience is localised, reliant on niche capital flows, and unlikely to offset broader construction challenges nationwide.” – Bjorn De Nijs, Construction Partner, BDO Southern Lakes & Central Otago

Forward work is strongest where demand is most resilient

The South Island has the strongest confirmed work position, with no South Island respondents reporting that they need additional work and 82% have sufficient confirmed work for at least 6 months.

Five percent of Auckland construction businesses report that they need more work and 74% have sufficient confirmed work for at least 6 months. In addition, a quarter of Auckland construction firms surveyed have sufficient confirmed work for 12 to 18 months, higher than other regions. This suggests there are still meaningful opportunities in the Auckland market, particularly for firms with the capability to compete for larger, more complex or better-funded projects. However, the combination of subdued residential activity, softer commercial conditions and heightened tender competition means business owners need to be selective. In Auckland, resilience may depend on choosing work with strong client funding, realistic programme assumptions and enough margin to absorb delay or scope risk.

“Auckland is still an active market, but it is also a much more selective one. Recent sector commentary points to a subdued residential pipeline, softer commercial conditions and greater competition for work, while civil, infrastructure and industrial projects are providing more resilient pockets of activity. For many construction firms, the challenge is not simply finding opportunities but converting the right work into profitable projects at a time when delays, feasibility pressures and tighter margins are still shaping decision-making.” – Nick Innes-Jones, BDO National Construction Sector Leader

For Auckland firms, this points to the importance of disciplined bid selection, careful client due diligence and realistic pricing for delay risk.

Despite fewer businesses in the rest of the North Island expecting to feel positive about business performance in six months’ time, they have the most confirmed work for this period. This suggests sentiment in the rest of the North Island may be shaped less by immediate workload and more by concerns about what comes next. Short-term confirmed work can support activity, but if future demand is uncertain, margins are tight or project timing is unclear, business owners may still take a cautious view of the next six months. For firms in this position, the priority is likely to be converting near-term activity into reliable cash flow while continuing to build a more resilient medium-term pipeline.

Business forward work position

“Central Otago continues to stand out as a high-growth market. Demand remains strong, particularly in residential development driven by population growth and ongoing migration into the region. However, the key constraint is delivery capacity, with labour, infrastructure and consenting all limiting how quickly projects can be brought to market” – Bjorn De Nijs, Construction Partner, BDO Southern Lakes & Central Otago

Activity alone is not enough – margins matter

The South Island also stands out on gross profit margins, with 39% of respondents reporting an increase over the past 12 months, compared with 23% in Auckland and 27% across the rest of the North Island. This may reflect a stronger mix of viable projects, better tender conversion or more disciplined pricing in parts of the region. However, it also reinforces an important point for the wider sector; activity alone is not enough. In the current market, the strongest operators are those converting work into profitable, well-managed projects.

“Central Otago continues to stand out as a high-growth market. Demand remains strong, particularly in residential development driven by population growth and ongoing migration into the region. However, the key constraint is delivery capacity, with labour, infrastructure and consenting all limiting how quickly projects can be brought to market” – Bjorn De Nijs, Construction Partner, BDO Southern Lakes & Central Otago

Businesses with increased gross profit margin

(Last 12 mths vs expectation for next 12 mths)

Auckland

23%

22%

Rest of North Island

27%

24%

South Island

39%

24%

Key

Last 12 months

Next 12 months

“The South Island construction sector is showing resilience, but it is not insulated from risk. Many firms still have work in the pipeline, and tender conversion is strong enough, yet the pressure is shifting from finding work to protecting the quality of that work. With input costs, interest rates and supply-chain cost pressures all weighing heavily, the next 12 months will reward disciplined operators who price risk properly, validate project feasibility early and protect margin at contract level.” – Martin Veitch, Construction Partner, BDO Christchurch

Labour intentions reveal different regional pressures

Recruitment activity - regions

Regionally, Auckland appears to have the most stable labour market. Businesses in the rest of the North Island report the strongest hiring intentions over the next twelve months, with 32% actively looking for staff, but also, the highest potential layoffs (11%). This compares to 5% of businesses in the South Island and just 1% of Auckland businesses.

The rest of the North Island’s combination of higher hiring intentions and higher potential layoffs points to a more uncertain operating environment. Some firms may be preparing for growth where work is confirmed, while others are adjusting to softer demand or margin pressure. This reinforces the need for careful workforce planning, particularly in a market where skills remain critical, but overcapacity can quickly put pressure on cash flow.

Hot topics by region

A range of topical factors stand out as top-of-mind for construction business leaders in successfully navigating the economic landscape over the year ahead. There are a few variations by region, but largely, a similar outlook for all.

	Auckland	Rest of North Island	South Island
Expected net profit margin (next 12 months) – significantly/slightly higher	37%	32%	34%
Expected impact of fuel price inflation (next 12 months) – significant/moderate	67%	77%	66%
Very likely to be unable to meet financial obligations or experience insolvency (next 12 months)	4%	5%	3%
Recruitment intentions (next 12 months) – actively hiring	27%	32%	29%
Expect to feel positive about leveraging new tech and AI (next 12 months)	47%	45%	61%

Regional resilience depends on profitable, deliverable work

The regional picture for 2026 is therefore one of divergence rather than broad-based recovery. Some markets are supported by stronger pipelines, population growth, tourism, infrastructure or higher-value residential demand. Others are still working through weaker confidence, delayed projects and tighter margins. For construction business owners, the key question is not just where activity exists, but whether that activity can be delivered profitably, funded reliably and resourced sustainably.

Key takeaways for construction business owners

Pipeline quality matters as much as pipeline length. A longer forward work position is only helpful if the work has been priced with enough contingency for cost, labour, funding and timing risk.
Regional demand is becoming more selective. Businesses should assess which sectors and locations are supported by resilient demand drivers, such as infrastructure funding, population growth, tourism, industrial activity or high-end residential demand.
Margin protection should be reviewed at contract level. In a competitive tendering environment, firms need clear rules for minimum acceptable margin, escalation clauses, variation management and payment terms.
Capacity decisions need to stay flexible. Labour plans should reflect realistic confirmed work, not just tender activity or expected market recovery.
Cash flow discipline remains critical. Delays in commencement, consenting or client decision-making can create working capital pressure even when the order book looks healthy.

Regional insights