New Zealand construction activity declines as crane numbers hit nine-year low

The latest Rider Levett Bucknall (RLB) Crane Index for Q1 2025 reveals a construction sector facing significant challenges across New Zealand, with long-term crane numbers falling to their lowest levels since 2016. The index recorded a 15.3 per cent decline in crane activity since the previous quarter, with only 105 cranes now visible across the country's skylines, down from 124 in Q3 2024.

Auckland, traditionally the powerhouse of New Zealand's construction activity, experienced the sharpest decline with a 23.5 per cent reduction in crane numbers. The city now hosts 52 cranes, down from 68 in the previous quarter, marking its lowest level in nine years. This reduction reflects broader challenges in the market, particularly the lack of project commitments beyond design stages that has persisted throughout 2024.

The residential construction sector shows some resilience amid the broader downturn. While still below historical levels, residential cranes now account for 24.8 per cent of all cranes across New Zealand, up from 17.7 per cent in the previous quarter.

This modest uptick may partially reflect improved housing market sentiment following recent interest rate reductions, though it occurs against a backdrop of overall construction decline.

Non-residential construction continues its downward trajectory, with the index falling to 139 points from 179 in the last edition. This represents 79 non-residential cranes across major centres, highlighting challenges across commercial, civic, and infrastructure projects.

The slowdown in building approvals over the past 18 months is now translating into reduced on-site activity as existing projects reach completion without sufficient new developments in the pipeline.

Regionally, the picture is mixed. While Auckland, Dunedin, and Tauranga saw significant decreases, Queenstown and Wellington showed modest increases in crane numbers.

Christchurch remained relatively stable, largely supported by the Te Kaha Stadium project, which alone accounts for 10 cranes, the highest number on any single construction site in the country.

The construction industry faces multiple challenges, including government reviews of capital works spending across education, health, and social housing sectors following budget concerns and high inflation.

The commercial market has been affected by capital value reduction and cautious investment sentiment, resulting in a limited pipeline of on-site work.

Looking ahead, industry stakeholders await the May 2025 government budget, which will be crucial for the construction sector's recovery. The budget will shape the 2026 project pipeline and mark the halfway point of the current government's three-year tenure.

The improving interest rate environment may help stimulate residential development activity in the medium term, particularly for shovel-ready projects that have been awaiting more favourable economic conditions.

Despite current challenges, the cyclical nature of construction suggests opportunities on the horizon. The recent interest rate reductions, combined with New Zealand's persistent housing shortage and aging infrastructure, could stimulate a new development cycle once economic confidence strengthens.

Forward-thinking developers and contractors are using this period to reposition, form strategic partnerships, and prepare for the next growth phase, which history suggests often follows periods of contraction.

The government's increasing focus on addressing housing affordability and infrastructure renewal presents potential medium-term opportunities.

While major projects like Auckland's City Rail Link are nearing completion, a renewed commitment to essential infrastructure investment could help bridge the gap until private sector confidence returns.

Companies with diversified capabilities across residential, commercial and infrastructure sectors may be best positioned to navigate the current market while preparing for recovery.