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A new survey has shown the extent of decreased construction demand, reporting that one in five builders are working at less than 50 per cent of their potential capacity, with the industry expecting work to dry up further in 2025. 70 per cent of local businesses surveyed in the 2024 EBOSS Builder Sentiment Report believed […]
A new survey has shown the extent of decreased construction demand, reporting that one in five builders are working at less than 50 per cent of their potential capacity, with the industry expecting work to dry up further in 2025.
70 per cent of local businesses surveyed in the 2024 EBOSS Builder Sentiment Report believed industry conditions would continue to decline over the next year. Two-thirds of builders reported seeing less demand for their services compared to the same time last year. 38 per cent noticed an increase in the number of projects put on hold, and 34 per cent noted an increase in projects being cancelled outright.
Matthew Duder, managing director at EBOSS, reasons the survey results to a combination of factors: “rising interest rates, increased material costs, and broader economic conditions — has led to a decrease in construction demand, perpetuating a cycle that has already led to the closure of several building companies, with many others struggling to stay afloat.
“Smaller businesses, in particular, are doing it tough — sole builders are at just 57 per cent capacity on average, and companies of two to five employees are only at 63 per cent capacity. These businesses typically focus on residential work, which has seen an earlier downturn than the commercial market.”
On average, building companies operate at two-thirds of their potential capacity. This number has come down from the peak of 83 per cent in 2022 but still shows that the construction industry is operating below its abilities courtesy of low demand.
The biggest concern is that the number of businesses that are only working at zero to 49 per cent of capacity has more than quadrupled — from five per cent in 2022 to 21 per cent in 2024.
The EBOSS 2024 Builder Sentiment Report, funded by the BRANZ Building Research Levy, surveys over 650 New Zealand builders, highlighting the economy’s impacts on the construction industry.
“There is much less forward work on the books than builders have experienced over the past few years — sitting at 8.6 months on average, compared to 11.2 months in 2022,” says Duder.
“Again, those numbers are looking worse for residential builders, and overall, just under a third of those surveyed said their business has just zero to three months of forward work left.”
“For builders, a big opportunity to increase efficiency is in improving the council compliance process,” says Duder.
“Building design and detailing was also identified by two-thirds of builders as an area with room to improve, closely followed by upskilling and training onsite and documentation.
“Overall, builders are seeing that there is not one but several areas where there is an opportunity to increase efficiency — with a need for different parties to work collaboratively to find solutions and streamline the build process.
“For example, with structural and passive fire products, builders feel that more consideration is needed to ensure the products meet the requirements laid out in the New Zealand Building Code.
“And when it comes to Enclosure products such as weatherboard cladding and roofing, builders are cautious about overseas certified products, highlighting potential issues including leaky buildings, increased liability, and the possibility of substandard construction.”
Builders surveyed did call on the government not to treat all products equally, however. “Although there is general support for the proposed change, care needs to be taken in implementation to avoid a repeat of something like the Leaky Building crisis,” added Duder.
The survey also asked a question on the coalition government’s proposed design rule changes to granny flats – structures less than 60 msq. Overall, the industry feels comfortable self-assessing this type of building work.
Overall, survey respondents were positive about the proposed design rule changes; 69 per cent of builders believed it is a good idea to have granny flats exempt from the standard council process.
73 per cent said they would feel comfortable signing off on the work without the council’s approval and sign-off.
