Auckland glut, IRD crackdown push more builders into liquidation
Tuesday, 11 November 2025
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New Zealand’s construction slump is proving less a sudden crash than a long and uneven reset following the pandemic boom, with a wave of small-to-medium firms across the North Island sliding into liquidation.
More than 20 developers and construction businesses folded across the North Island last week alone, led by Auckland with closures also appearing in Wellington, Hamilton and Hawke’s Bay.
Auckland developers were now left with excess stock as demand weakened, and many firms were caught holding new homes they couldn’t sell at all, let alone profitably, Infometrics chief forecaster Gareth Kiernan said.
“Property developers might have continued building for a bit after things started to slow down, and then they’ve been potentially left with stock on their hands,” Kiernan told The Post. “ They haven’t been able to sell or they haven’t been able to sell at a profit.”
Kiernan said the pressure had “been felt most critically in Auckland and Wellington,” where both residential and commercial pipelines have thinned.
The capital is still digesting deep public-sector job cuts, while Auckland, normally the first to lift on immigration, is yet to benefit meaningfully from new arrivals.
South Island steadier
The sector’s regional divergence has become stark. Credit Works chief executive Phil Ashby describes the split as a “K-recovery” where the South Island is stabilising, and in pockets strengthening, while northern metros continue to contract.
Ashby said developers in Auckland were dealing with oversupply, slow sales and bank lending requirements that demanded high pre-sale thresholds before financing.
He said apartment blocks that failed to sell have been held as rentals, and large-scale intensification continues in outer suburbs like Westgate, Beachlands and the eastern growth corridors.
Meanwhile Central Otago, Queenstown, Southland and increasingly Christchurch have remained busier. Population inflows, remote-work relocations and strong dairy returns have supported demand. Meanwhile tourism recovery had buoyed Otago’s commercial pipeline.
“Rural New Zealand is starting to feel better,” Ashby said. “We’ve seen a lot of drift in population to Christchurch.”
“Aucklanders can’t afford to buy a house, so people have basically up and moved their families to Christchurch, and they’re working remotely from there for companies in Auckland.”
In Christchurch a four-bedroom house or a brand-new property is affordable, he said.
Credit Works receives live payment-behaviour data from major building-supply merchants and has seen spending flatten after two years of decline.
“We’ve seen the bottoming out over the last 12 months. It’s stopped getting worse, which is a good thing,” Ashby said.
He pushed back on claims the sector has “gone bust”, with the total number of registered construction companies still about 46% higher than a decade ago, despite insolvencies have risen about 115% since mid-2022.
“If you look at it as a percentage, it’s actually not gone up that much at all,” Ashby said. “We’re simply returning to a normal level.”
Smaller firms
The recent closures are disproportionately concentrated among small-to-medium operators who held on too long as demand dropped.
PFK Corporate Recovery and Insolvency’s Chris McCullagh said the sector has been through “a long, difficult period” with not enough work to go around.
“Businesses held on to the staff for maybe longer than they otherwise would in the expectation that the market would come right,” McCullagh told The Post.“They’ve got less work and also higher costs.”
Some developers have prioritised rent, wages and suppliers, leaving GST and PAYE in arrears. That left businesses caught out during Inland Revenue’s current crackdown in overdue tax.
Credit Works’ Ashby said that shift is now pushing more firms into liquidation: “If you’re not repaying your plan, [Inland Revenue] are going to take action and put you into liquidation.”
“It’s not a sign of the times, it’s a sign of a badly managed business,” Ashby said.
Infometrics’ Kiernan said a decade-long market upswing left some operators unprepared to run lean when conditions turned.
“Your costs get a little bit out of control,” he said. “[Some owners] don’t necessarily have the business acumen or nous to cope with a change in market conditions.”