Australia & New Zealand

Some decent news for a change, the Australian construction sector is that Australia is seeing a good number of new Data centers / AI facilities breaking ground around the country. expansion of Data Centre Capacity. 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 Australia construction sector will see some moderate growth in 2026, propelled by infrastructure, mining, pipelines, oil & gas, AI related data centers, commercial & new housing related capital projects. Australia & New Zealand construction challenges include, a shortage of skilled labor, high ocean freight 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 cost continues 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 into 2026.

Australia’s construction market is estimated to be in the $190 to $210 billion range by the end of 2026.

New Zealand, Australia’s close neighbor will see a similar situation driven by Government funded infrastructure expenditures on roads and bridges, electrical distribution upgrades, lower interest / borrowing rates, additional housing units related 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.

Australia’s standoff / friction with China seems problematic & hard to understand / to be in a state of flux, as China commences purchasing iron ore and other minerals once again. Conflicts in Europe and the Middle East and the ongoing attacks on shipping in the Red Sea area have increased ocean freight costs, this has not been beneficial to the Australian and New Zealand construction sectors in the last 6 to 12 months as a good amount of construction materials are imported into the two countries.

The size of the New Zealand construction market is estimated to be in the $55 to $65 billion in 2025, construction activity is expected to remain similar to 2026 levels.