NZ builders warn of a crash
Industry experts in New Zealand warned that the building sector could be 'tanked' as construction costs climb, pointing specifically to higher fuel prices as the latest cost driver. (nzherald.co.nz) Regional reporting repeated the concern, noting the market hadn’t fully recovered and that rising operating costs are squeezing builders and project pipelines. (odt.co.nz)
New Zealand builders are warning that a fresh jump in fuel costs could hit a sector that was only just starting to recover. (rnz.co.nz) Radio New Zealand reported on April 17 that Auckland University of Technology professor John Tookey said construction costs could spike by 25% or more as higher oil prices feed into materials, freight and site work. He said damaged oil production had cut output by 22% or more and called the risk a “huge” problem for housing and infrastructure. (rnz.co.nz) Tookey said bricks, plasterboard, aluminium and steel all depend heavily on energy to make and transport. He said some builders were already being hit by repeated supplier price rises and warned materials could rise by 30% to 50% in a worst-case scenario. (rnz.co.nz) That warning lands as official forecasts had been pointing the other way. The Ministry of Business, Innovation and Employment said in its December 2025 National Construction Pipeline Report that total construction activity was expected to fall to NZ$55.7 billion in 2025 from NZ$58.1 billion in 2024, then rise from 2026 and reach NZ$65.4 billion by 2030. (mbie.govt.nz) The same report forecast new dwelling consents would grow from 33,500 in 2025 to 40,000 by 2030. Stats NZ said on April 1 that 37,534 new homes were consented in the year ended February 2026, up 12% from a year earlier. (mbie.govt.nz) (stats.govt.nz) Costs were already turning up before the latest fuel shock. Cotality’s Cordell Construction Cost Index, reported by RNZ on April 8, showed residential building costs rose 1.0% in the March 2026 quarter, the fastest quarterly pace in two and a half years, with annual growth at 3.0%. (rnz.co.nz) Cotality chief property economist Kelvin Davidson said the sector had moved out of the easing phase seen through much of 2024 and 2025. He said higher fuel prices and events in the Middle East were “unknowns” that could push freight and materials costs higher just as more projects were becoming viable. (rnz.co.nz) Quantity Surveyors QV CostBuilder said in its March 2026 update that average element rates rose 0.4% in a month, with site preparation up 2.0% and substructure up 1.8% because diesel got more expensive. Its trade rates showed excavation up 7.8%, with piling and demolition also rising on diesel costs. (costbuilder.qv.co.nz) The industry response has not been limited to one academic. RNZ said Building Industry Federation chief executive Julian Leys was also concerned, adding that he advises government on the building supply chain and talks regularly with Australian industry counterparts. (rnz.co.nz) The immediate question is whether builders can keep absorbing those increases while demand is still uneven. The latest data showed consents recovering, but the new warning is that a fuel-driven cost surge could choke off that rebound before it is fully established. (stats.govt.nz) (rnz.co.nz)
