Data shows workloads falling as costs rise 

Recent data suggests New Zealand building companies remain under pressure as construction costs keep rising while the value of work being undertaken continues to fall 

QV’s latest CostBuilder report shows the average residential build cost per square metre increased by 1.6% over the three months to the end of May, and by 2.4% over the 12 months to May. 

Non-residential build costs, which include commercial buildings such as shops, offices and warehouses, as well as public buildings such as hospitals and schools, rose by 1.0% over the three months to May and by 1.8% annually. 

The cost increases come as Stats NZ estimates the total value of building work being undertaken around the country has declined for nine consecutive quarters. 

Its latest Value of Building Work report estimates building projects worth $7.19 billion were commenced in the first quarter of this year, down $452 million, or 5.9%, compared with Q1 last year. 

Diesel relief welcomed, but volatile 

The QV CostBuilder report did contain some relief for contractors, with diesel prices falling 18.9% in May. 

Being a major cost for work involving heavy machinery, the decline flowed through to some trade costs. Excavation costs fell by 5.1% in May, while piling costs declined by 0.9%. 

“The steep price of fuel has obviously been the most pressing issue in recent months,” said QV spokesperson and quantity surveyor Martin Bisset. 

“We’ve seen some of that pressure ease now, but diesel is still significantly higher than it was earlier this year and it remains highly volatile.” 

Non-residential work falls fastest 

Stats NZ’s Value of Building Work report on Q1 of 2026 shows the slowdown in new work is being felt across both residential and non-residential building, with non-residential projects falling faster. 

Over the year to March, the value of non-residential building projects commenced fell from $12.7bn to $11.6bn, a decrease of $1.1bn, or 8.6%. 

Residential building projects declined from $20.1bn to $19.4bn over the same period, a fall of $773m, or 3.8%. 

Among the four biggest regions, Wellington recorded the largest year-on-year fall in total building work in Q1, down 14%. Waikato was down 9.8%, followed by Auckland down 5.2% and Canterbury down 3.8%. 

Construction downturn may take time to turn 

ANZ Research’s NZ GDP and BoP – Q1 2026 also highlighted ongoing pressure in the sector, saying the volume of building work put in place fell 3.5% in Q1. 

The report said this was the biggest downside surprise in recent sector data and suggested the downturn in construction activity from its 2023 peak was still ongoing. ANZ also forecast construction would shrink 1.4% over the quarter, making it the weakest area in its GDP outlook. 

ANZ said the recovery may take time, with the recent increases in residential consents taking longer to flow through to actual building activity, and the non-residential construction cycle typically slow to turn.