Australia and New Zealand market intelligence: shifting conditions shape 2026 outlook
Our latest report highlights that construction markets across Australia and New Zealand are adjusting to evolving economic conditions. Persistent inflation, tight labour markets and shifting infrastructure priorities are continuing to influence confidence as we move through 2026.
While Australia is experiencing steady activity in emerging growth areas, New Zealand is beginning to stabilise after a prolonged period of volatility.
Private investment strengthens Australia’s construction outlook
Australia’s economy grew by 0.4% in the 2025 September quarter and 2.1% over the year, supported by strong domestic demand and the fastest rise in private investment since 2021. Growth slowed slightly from early 2025 due to inventory drawdowns and weaker net trade. However, household spending and business investment remained resilient.
Construction activity held steady throughout Q4 2025, underpinned by public investment in health, education and utilities. Structural shifts are becoming more pronounced, with energy infrastructure and data centres emerging as growth areas. Meanwhile, major road and rail programmes are softening as large projects reach completion.
Residential activity shows early signs of recovery, supported by planning reforms, a rise in dwelling approvals and targeted incentives. Despite stable momentum, labour shortages and delivery capacity constraints continue to challenge the market as we move through 2026.
Policy support lifts confidence across New Zealand’s economy
New Zealand’s economy contracted by 0.9% in the June quarter, marking the third consecutive decline in five quarters. Activity remains subdued across construction, manufacturing and services, however, recent interest rate cuts and easing inflation are helping to stabilise conditions.
The Reserve Bank lowered the Official Cash Rate to 3.0% in August, with further cuts expected to support demand. While construction activity remains flat, infrastructure investment is projected to strengthen ahead of the 2026 national election.
Labour shortages persist, but targeted migration and apprenticeship programmes are aimed to help to rebuild capacity. Although near-term growth is limited, policy adjustments and public sector investment are expected to support a gradual recovery.
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