The 2024 EBOSS Builder Sentiment Report paints a challenging picture for New Zealand’s residential construction sector. One in five builders is working at less than 50% of their potential capacity. Two-thirds have seen demand for their services fall compared to the same period last year. And 70% believe conditions will continue to deteriorate through 2025.
These are significant numbers — and they reflect a sector adjusting to the end of a prolonged building boom that pushed many builders to the limits of their capacity in 2021 and 2022.
What’s Driving the Slowdown
The EBOSS survey identifies several interrelated causes for the reduced demand that builders are experiencing. Elevated interest rates have pushed up the cost of construction financing for developers and the cost of mortgages for homeowners undertaking major projects. Building costs remain high — the 44% cost increase over four years documented by QV CostBuilder has priced some potential projects out of feasibility.
Consumer confidence has also been weighed down by economic uncertainty. Homeowners who might otherwise have proceeded with a renovation or extension are holding off until the outlook improves. New development projects are similarly stalled at the feasibility stage, waiting for costs to fall or property prices to recover to the point where margins are viable.
Who Is Feeling It Most
Builders who built up staff and subcontractor relationships during the boom are now managing the difficult task of maintaining those relationships while workloads fall. The alternative — letting good people go, only to need to find them again when the market recovers — is one that many experienced builders are reluctant to take.
38% of respondents to the EBOSS survey noted an increase in the number of builders tendering for the same projects, indicating that competition has intensified as available work has shrunk. This creates pressure on margins and makes the quality of quoting and client relationship management more important than ever.
Finding Work in a Softer Market
Builders who are maintaining their pipelines in the current environment tend to share common characteristics: strong client relationships built over multiple cycles, a clear niche or specialisation that makes them the obvious choice for certain project types, and disciplined quoting that protects margins rather than chasing volume at any price. The builders who cut prices to fill their books in a downturn often find themselves locked into unprofitable work when the market recovers and costs rise further.