Australia & New Zealand combined will see 1.4% to 2.1% GDP growth in the 3rd Q of 2026
The main issue for the Australian & New Zealand construction sectors is how long will the Iran conflict last, will it cause inflation to spike in the next 3 to 6 months and beyond?
The Australian and New Zealand construction industries were experiencing a decent growth spurt in January and February, prior to the start of the Iran conflict. Higher inflation, increased ocean freight will increase construction costs and slow growth prospects for the next 2 or 3 quarters.
Some decent news for a change in the Australian construction sector is that Australia is seeing a good number of new Data centers / AI facilities breaking ground around the country. The Australian home building construction sector is set to contract by 3% to 4% as we move further into 2026. The recent terrorist attack on Bondi Beach is a major issue the Government needs to deal with.
The Australian construction sector will see some moderate growth in the 2nd half of 2026, propelled by infrastructure, mining, pipelines, oil & gas, AI related data centers, commercial and new housing related capital projects. Australia and New Zealand construction challenges include, a shortage of skilled labor, high ocean freight and energy costs, increased costs of both labor and materials, a spike in inflation, the future actions of its reasonably close neighbor China.
Increased labor and material costs continue to be a problem, a number of mid-sized construction companies have gone out of business in the last 6 / 12 months, which is problematic. However, the construction industry appears to have turned the corner, a more positive attitude as we move further into 2026.
Australia’s construction market is estimated to be in the $190 to $210 billion range by the end of 2026.
New Zealand will see a similar situation driven by Government funded infrastructure expenditures on roads and bridges, electrical distribution upgrades, lower interest / borrowing rates and additional housing units related to an increase in New Zealand’s population growth.
The unusual recent naval operation of (3) Chinese warship sailing in & around the Tasman Sea has set off alarm bells in both Australia & New Zealand & will result in increased military spending in both countries.
The size of the New Zealand construction market is estimated to be in the $55 to $65 billion in 2026, construction activity is expected to remain similar to 2025 levels.
