New Zealand builders and property developers are selling newly completed homes at, or very close to, the cost of building them, a warning sign that cash flow now matters more than profit as the construction downturn drags into its worst stretch in a decade.
Carl Taylor, chief executive of the CBS Co-operative, a building products buying group with about 2,200 members, told RNZ that the practice was becoming common as firms fight to stay afloat. “From conversations I’m having across the industry, I know of builders and developers who are selling completed townhouses at, or very close to cost, simply to free-up capital and keep their businesses moving,” he said.
“That’s not a sign of a healthy market. It’s a sign that cash flow has become more important than profit,” Taylor said.
The co-operative has operated for about a decade and buys materials in bulk to lower costs for its members, while also speaking up for the wider building trade. Taylor described the current slump as the worst he has seen since 2015, setting aside the short Covid shutdown, and said the shrinking amount of available work was pushing margins to the bone.
“There’s still a smaller pool of work. So the guys are competing for that smaller pool by lowering their margins, lowering their labour, and lowering their total profitability and trying to win work,” he said. “We’re seeing a lot of guys that are working for nothing. Some of the developers I’ve spoken to have said to me that they’re selling their houses at cost just to get them through to get them moving on to the next project, and that happens in that boom bust cycle.”
The picture Taylor paints matches the hard numbers. Total construction activity has fallen from about $63 billion in 2023 to $58.1 billion in 2024 and $55.7 billion in 2025, according to RNZ’s analysis of the sector. The building work component, which strips out civil and infrastructure jobs, dropped even faster, from $36.3 billion in 2023 to $31.2 billion in 2025, a slide of more than 8 percent in the most recent year alone.
The pain has flowed straight through to company balance sheets. There were 551 fewer building and construction companies in business at the end of 2025 than a year earlier, with about half of the failed firms working on multi-unit housing, the type of medium-density development that boomed when interest rates were low. Liquidations are expected to keep climbing through the rest of 2026.
Roughly 15,000 jobs were lost after a wave of infrastructure projects was axed following the last election, and many tradespeople have crossed the Tasman for steadier work in Australia. There are early hints of a floor forming, with construction job advertisements up 35 percent in the year to March 2026, but the recovery looks patchy and slow.
Demand has weakened even as the country needs more homes. Figures from Stats NZ for the year ended June 2026 show household numbers rose 1.4 percent to about 2.072 million, yet the number of private dwellings actually fell by 200 to 2,124,800. In plain terms, more households are forming while the supply of new homes has stalled.
Developers have been squeezed from several directions at once. Many bought land near the top of the market, then watched interest rates climb, buyer demand fade and selling prices fall. The Reserve Bank lifted the Official Cash Rate to 2.5 percent this month, and banks passed the increase on to floating mortgages, tightening the maths on any new project. With finished homes sitting unsold, some builders have decided that turning stock into cash at cost beats carrying it.
Taylor argued that the way out runs through more certainty for the industry rather than short-term stimulus. He welcomed the government’s signal that it will move toward proportionate liability, a change that would stop councils and builders being left to carry the full cost of a defect when other parties share the blame. “Government has signalled important reform, including the move toward proportionate liability. That direction is welcome. But builders operate on certainty, not announcements,” he said.
“If we get the settings right, New Zealand can build faster, better, and more affordably,” Taylor said.
There are brighter patches. Canterbury and Otago have been posting record building consents, helped by steady population growth in the south and cheaper land than Auckland. MBIE forecasts national construction work to recover to about $65.4 billion by 2030, though that would sit only around 4 percent above the 2023 peak, underlining how long the road back is likely to be.
For now, the sight of new townhouses changing hands for little more than they cost to build tells its own story about where the market sits, and how much further some firms are prepared to go to survive it.
Are you seeing the building slowdown where you live, or holding off on buying or building until prices settle? Share your thoughts in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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