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Portrait of Tiffany Emmett, Associate Director, Construction Economics, standing outside in front of buildings featuring an urban cityscape with a mix of architectural styles. The scene includes some windows and red features, adding a touch of color.
Tiffany Emmett
Project Director, Construction Economics
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Our latest report shows how the construction sectors in Australia and New Zealand are adapting to new economic conditions, including changes in interest rates, labour market pressures and evolving infrastructure priorities. While Australia is seeing growth in residential and utility sectors, New Zealand’s market is slow with early signs of improvement due to policy support and interest rate cuts.

Australia’s construction outlook strengthens 

Australia’s economy expanded by 0.6 percent in the June quarter and 1.8 percent over the year, marking a modest rebound following weather-related disruptions earlier in 2025. Household and government spending supported growth, though public investment declined as major infrastructure projects completed. 

Market trends show construction activity is steady across healthcare, education and utilities, with data centres and manufacturing emerging as growth areas. Residential construction is gaining momentum, driven by lower interest rates, population growth and targeted incentives.  

Infrastructure priorities are shifting toward energy and water systems, reflecting Australia’s net-zero commitments and the rising demand for resilient utilities. While the outlook remains positive, labour shortages and delivery capacity continue to pose challenges.

Economic recovery efforts progress across New Zealand 

New Zealand’s economy contracted by 0.9 percent in the June quarter, marking the third 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 percent in August, with further cuts expected to support demand. While construction consents stays flat, experts predict that infrastructure investment will strengthen ahead of the 2026 election.  

Labour shortages persist, with targeted migration and apprenticeship programmes aimed at helping to rebuild capacity. Although near-term growth remains limited, we expected policy adjustments and public sector investment to support a gradual recovery. 

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