Infrastructure bucks construction slowdown as projects move into delivery

According to Rider Levett Bucknall’s (RLB) Third Quarter 2026 Infrastructure Forecast report – Third Quarter 2026: New Zealand Trends in Infrastructure Construction, New Zealand’s infrastructure construction sector is showing resilience despite continued weakness across the wider construction market, but a sharp increase in civil construction costs is putting renewed pressure on project budgets and delivery.

RLB’s latest New Zealand Trends in Infrastructure Construction report, prepared by the New Zealand Institute of Economic Research (NZIER), finds that civil construction costs increased by 2.7 percent in the June 2026 quarter, taking annual cost growth to 5.2 percent. This compares with annual growth of 2.8 percent for residential construction and 2.2 percent for non-residential construction.

The report forecasts civil construction cost inflation will rise further, reaching approximately 5.8 percent in the September quarter and 6.0 percent in the December quarter, before easing through 2027 as the impact of the 2026 fuel price shock unwinds.

RLB Director Ed Cook commented that the figures highlight the increasingly important distinction between infrastructure and the broader construction market.

“New Zealand’s infrastructure sector is entering a period where a substantial forward pipeline is increasingly translating into funded, procured and active projects. At the same time, the sector is dealing with a very different cost environment from the construction boom of 2021 and 2022,” Mr. Cook said.

“The immediate pressure is being driven less by widespread capacity constraints and more by energy, fuel, freight and other imported inputs. However, as the infrastructure pipeline continues to build, competition for specialist skills, plant and other civil construction resources will become increasingly important.”