The conflict in the Middle East is pushing construction costs up across Australia. If you are planning a renovation, extension or new build in Canberra, here is what is actually happening, what it means for your project, and how to plan around it.

I am going to give you the straight facts here. No panic. No spin. Just what we are seeing on the ground as builders, and what the industry data is telling us.

What is happening

On 28 February 2026, the United States and Israel launched military strikes against Iranian military and nuclear facilities. Iran responded by effectively shutting down the Strait of Hormuz, one of the most important shipping routes in the world.

Around 20% of the world's oil and 30% of its liquefied natural gas normally passes through this narrow stretch of water between Iran and Oman. When Iran clamped down, vessel traffic dropped from an average of 138 ships per day to just two within a week.

That single chokepoint has sent ripple effects through fuel markets, shipping routes and material supply chains globally. Australia is not immune.

How it is hitting Australia

Australia imports roughly 90% of its oil. We only have two refineries left in the country. That makes us particularly exposed when global energy supply gets disrupted.

Here is what the numbers look like as of April 2026:

Fuel

Diesel prices have climbed sharply. National average diesel reached around $3.14 per litre in late March, up roughly 36% in just two weeks following the escalation. The federal government responded with a temporary fuel excise cut (halved from 52.6 to 26.3 cents per litre) and dropped the Heavy Vehicle Road User Charge to zero until 30 June.

Diesel matters because construction runs on it. Civil construction gets around 79% of its energy from diesel. Every truck delivering sand, concrete, timber or steel to your site is burning diesel. When fuel goes up, everything that moves goes up with it.

Materials

Suppliers across Australia have introduced emergency fuel levies on products from sand and concrete through to bricks and roof flashings. Beyond fuel surcharges, some materials are seeing direct price pressure:

  • PVC and plastic piping: up 28-40%, driven by petrochemical feedstock shortages. Polypipe notified customers that PE resin spot prices for April were approximately 40% higher than March.
  • Asphalt: up around 50% in some regions
  • Stormwater and drainage products: up 30-40%
  • Cement: up 10-15% on imports, with trucking adding another 12-15% on top
  • Copper: up around 16.5% year on year, driven by both the conflict and structural demand from electrification projects

Shipping

Ships that used to go through the Strait of Hormuz and the Suez Canal are now rerouting around the Cape of Good Hope in Africa. That adds up to two weeks to transit times. Freight costs have jumped 30-50% on some routes, and container availability has dropped 15-20%. Anything imported from Europe or Asia is taking longer and costing more to get here.

What this means for building and renovating in Canberra

Master Builders Australia reported that new home building costs were already up 3.7% year on year to February 2026, the fastest increase in 16 months, and that was before the full impact of the conflict flowed through. Their chief economist Shane Garrett warned that material cost increases could push building costs even higher.

To put this in perspective, building a new home in Australia is now roughly 47% more expensive than it was just before the pandemic in late 2019. The concern within the industry is that a prolonged conflict could push that figure past 50%.

For a typical Canberra renovation or extension, the cost impacts are showing up in a few ways:

  • Fuel surcharges on deliveries: most suppliers have added 5-15% surcharges on anything that comes by truck
  • Plumbing and drainage materials: PVC pipe and fittings are among the hardest hit because they are derived from petrochemicals
  • Concrete and cement: modest but steady increases, compounded by transport costs
  • Longer lead times: some imported items are taking 2-4 weeks longer to arrive, which can push out project timelines
  • Fixed-price contract pressure: builders operating under fixed-price contracts are absorbing cost increases that were not priced in. This is putting real pressure on margins across the industry.

What we are doing about it

At Rentoule Projects, we have been through supply chain disruptions before. COVID taught every builder in Australia hard lessons about pricing, procurement and communication. Here is how we are managing through this period:

We are locking in materials early. Where possible, we are ordering and securing key materials at the start of a project rather than waiting for each stage. This reduces exposure to price movements mid-build.

We are being upfront about costs. If you are getting a quote from us right now, it reflects current pricing. We are not padding quotes with fear-based contingencies, but we are being honest about where costs sit today and where they might move.

We are monitoring supply chains weekly. Our site manager and project coordinator track material availability and delivery timelines closely. If something is going to be delayed, we plan around it rather than letting it blow out your schedule.

We still offer fixed-price contracts. We believe in giving you certainty. But we also believe in being transparent about what goes into that price and why it sits where it does right now.

Should you wait to build or renovate?

This is the question everyone is asking. Here is my honest take.

Nobody can predict how long this conflict will last or when prices will stabilise. What we do know is that construction costs in Australia have only gone in one direction over the past five years, up. Waiting for prices to "come back down" has not worked for anyone who tried that strategy during or after COVID.

The Australian Treasury has modelled two scenarios. If oil stays around US$100 for the first half of 2026, it could add between 0.5-1.25% to headline inflation and subtract 0.2-0.6% from GDP growth. If oil hits US$120 and stays there for a prolonged period, the impact would be more significant.

What I would say is this: if your project is well planned, your budget has some breathing room, and you are working with a builder who communicates openly about costs, there is no reason to put your life on hold. Homes are long-term assets. The cost of building today will look different in five or ten years regardless of what happens in the Middle East.

If your budget is already tight with no room to move, it might be worth waiting a few months to see how the situation develops. But do not assume that waiting will automatically mean lower prices. It rarely does.

Frequently asked questions

How much have construction costs gone up because of the conflict?

It depends on the material. Fuel-related surcharges are adding 5-15% across most deliveries. PVC and plastic products are up 28-40%. Cement is up 10-15%. Overall construction input prices were rising at an annualised rate of 12.6% through February before the conflict even started, so the pressure was already building.

Will my fixed-price contract protect me from these increases?

If you have already signed a fixed-price contract, your builder is generally locked in to that price. The cost increases are being absorbed by builders and their subcontractors. If you are about to sign a new contract, expect current pricing to reflect today's market conditions.

Are there any materials in short supply?

PVC pipe and fittings are the most affected due to petrochemical disruptions. Some manufacturers have declared force majeure and warned of supply challenges. Imported finishes and specialty items may also face longer lead times due to shipping delays.

Has the government done anything to help?

Yes. The federal government halved the fuel excise from 52.6 to 26.3 cents per litre from 1 April to 30 June 2026 and dropped the Heavy Vehicle Road User Charge to zero. The ATO has also introduced flexible payment arrangements for businesses affected by high fuel costs. These measures are temporary and set to expire on 30 June unless extended.

How long will this last?

That is the question nobody can answer with certainty. Industry bodies are planning for scenarios ranging from a short-term resolution within a few months through to a prolonged conflict stretching into 2027. Most analysts expect construction costs to remain elevated through at least the second half of 2026, with a return to pre-conflict pricing unlikely in the near term.

Get in touch

If you are planning a project in Canberra and want to understand how current conditions affect your budget and timeline, we are happy to have that conversation. No obligation, no pressure. Just straight talk from a builder who has been through market disruptions before.

Call us on 0434 435 966 or email info@rentouleprojects.com.