Architect and Designer Sentiment

AUGUST 2024, NZ — The past year has presented significant challenges for design professionals, with demand markedly reduced compared to a year ago and the majority anticipating the current downturn to persist or worsen over the next six months.

In response to these conditions, architects are adopting strategies such as cost-cutting measures, refraining from staff replacement, intensifying focus on service delivery, and pursuing business opportunities more aggressively.

The impact of these challenges is particularly acute for both ends of the industry spectrum – from the smallest to the largest practices, albeit for different reasons. Larger practices attribute their difficulties largely to governmental policy changes at both central and local levels, alongside shifts in government spending priorities. In contrast, smaller practices are more affected by stringent lending regulations and fluctuating interest rates.

The construction sector has historically navigated through cyclical periods of prosperity and downturn. However, the current slowdown comes at a time when profit margins are already under pressure due to sustained increases in construction product costs throughout 2022 and 2023. While cost escalation has stabilised, prices have not decreased substantially, leading to market hesitation in starting new projects or advancing existing plans amidst economic uncertainty.