For most of this year, there has been one question on every builder’s mind when a supplier notification lands in the inbox. How much, and what next.

For the first time in months, the answer is starting to be “less than you feared.” The fuel shock that defined the first half of 2026 has eased. Diesel is back near where it started, and some of the surcharges that piled onto materials through autumn are being quietly wound back. After a brutal run, there is finally room to look at the whole picture rather than just bracing for the next price rise.

That run was the sharpest cost shock the industry has seen since the COVID supply-chain chaos, and it came from an unlikely direction. Not timber. Not labour. Fuel.

But here is the honest state of play now that the worst of it has passed. Some costs are settling. Some are not, and the ones that are not have nothing to do with the Middle East. Understanding the difference is the thing that separates a builder who prices the next job correctly from one who guesses.

The number that frames everything

Before getting into what moved this year, it helps to remember where the baseline sits.

A new house now costs about 47 per cent more than it did before the pandemic. That is not a forecast. That is Master Builders Australia analysis of ABS data, and it is the floor under everything else. The COVID-era surge in timber, steel and labour pushed construction costs up more than 40 per cent between 2020 and 2024. Prices eased after that, but they never came back down. They just stopped climbing as fast.

That matters because it changes how you read every new figure. When you hear that material prices rose another couple of per cent this year, that increase is stacking on top of a base that is already almost half again what it was five years ago. Small percentages on big numbers are still big numbers. This is one of the broader conditions shaping the industry that no single supplier notification ever captures.

The most recent official read is the ABS Producer Price Index for the March 2026 quarter. Input prices to house construction rose 2.5 per cent over the year, and house construction output prices have now posted three straight quarters of growth at or above one per cent. The important caveat, and the ABS said this plainly, is that the figures were collected before 28 February. They do not yet show the fuel shock at all. The June quarter data, due in late July, will be the first proper look at what the crisis actually did.

What happened, and why it is easing

On 28 February 2026, conflict in the Middle East disrupted the Strait of Hormuz, the waterway that carries around a fifth of the world’s seaborne oil. For a country that imports roughly 90 per cent of its refined fuel and runs only two refineries, the effect was immediate and severe. The way that single event rippled through the construction supply chain is a story in itself, but the short version is this.

Diesel was the pressure point. East coast prices that had been sitting near $1.80 a litre climbed past $3, and in some places approached $4. For an industry where diesel runs every excavator, crane, concrete truck and delivery vehicle on site, that is not a line item. It is embedded in the cost of nearly everything.

The reason this is now easing comes down to two things. An interim deal in mid-June unwound much of the oil price premium, and on 23 June, Viva Energy restarted the main cracking unit at its Geelong refinery. By late June, petrol was back around $1.72 a litre, sitting at or below where it was before the conflict, and diesel had come down a similar distance from its peak. The fuel excise cut, which halved the rate from 1 April, runs until early August, with the government softening the cliff rather than letting the full rate snap back overnight.

That is the good news, and it is real. But fuel was only ever half the story.

The cost pressures that are not going anywhere

Here is the part that gets missed. While diesel grabbed every headline, a separate set of price drivers kept building in the background, and most of them have nothing to do with oil.

Steel. Through the first half of the year, the Anti-Dumping Commission stacked a wall of anti-dumping duties on imported steel, one product at a time. Duties of up to 82 per cent on Chinese hot-rolled coil. Rebar moved to a fixed 23.7 per cent rate from April, up from 19 per cent, locked in for five years. Steel corner beads, angles and ceiling frames all picked up their own duties. None of these are dramatic on their own. Together they reset the floor under one of the most common materials on any site. And because local steel is priced against the landed cost of imports, the duties lift the whole market’s pricing, not just the steel that actually comes off a boat.

Copper and electrical. Copper broke through US$13,000 a tonne early in the year, driven by electrification, grid upgrades, renewables and the data-centre boom. That structural demand is not going away. In the ABS data, copper and aluminium drove the largest rise in metal products, which fed straight into electrical cable and conduit. This lands hardest on the electrical, plumbing and mechanical trades that work late in the build sequence, often under the tightest timelines.

Concrete and cement. Both are energy-intensive to produce, so both moved with fuel. Major suppliers applied fuel surcharges of roughly $8 to $9 per cubic metre at the peak. Some of that is now softening as diesel retreats, but cement has its own long-run pressure from gas and electricity prices that predates the crisis entirely.

Petrochemical products. PVC, polyethylene and polypropylene piping jumped 27 to 36 per cent when oil spiked, because these materials are made from oil. As fuel settles, some of this should partly recover. Insulation, membranes, conduit and sealants sit in the same basket.

Timber. The quieter story. Structural timber saw only a modest move in the official data, and timber windows actually fell on weak demand. But haulage contractors reported diesel adding double-digit surcharges to mill deliveries, so the softness in the index masks real freight pressure underneath.

What this means when you price your next job

The takeaway is not “costs are coming down, relax.” It is more useful than that.

The fuel-linked costs, diesel, freight surcharges, petrochemical piping, concrete delivery levies, are the ones most likely to ease over the coming months as energy markets settle. If you have a job that got quoted at the peak of the panic, there may be some room coming back to you on those inputs.

The structural costs are different. Steel duties are locked in for years. Copper demand is being driven by forces far bigger than any one conflict. These are not going to retreat, and pricing a job as though they might is a mistake. RLB’s 2026 forecasts still have construction cost growth running between 4 and 6 per cent across the capitals, with Brisbane and the Gold Coast at the top end on the back of the Olympic and infrastructure pipeline. That is the trajectory even with fuel calming down.

The practical discipline has not changed. Re-cost anything with meaningful steel or copper content now, because the floor has moved. Get supplier notifications in writing and build a paper trail. And watch what your subbies are telling you about their own costs, because if the electrical and plumbing trades are being squeezed on cable and pipe, that lands on your job whether you priced for it or not.

It is also worth a hard look at any fixed-price contract still sitting in your pipeline. When the major Tier 1 contractors were abandoning lump-sum pricing during the worst of it, with tender validity windows as short as 15 days, that told you everything about how much risk a fixed price can carry in a volatile market. The volatility has eased. It has not vanished. Knowing which of your costs are settling and which are still climbing is how you protect your cash flow when the next notification lands.

Frequently asked questions

Are construction material prices going down in Australia in 2026?

Some are, some are not. The fuel-linked costs that spiked after the February disruption, diesel, freight surcharges, petrochemical piping and concrete delivery levies, have started to ease as energy markets settle and the Geelong refinery came back online in late June. But the structural costs have not moved. Steel duties are locked in for years and copper demand keeps climbing, so the overall picture is partial relief, not a broad fall.

Why is steel still getting more expensive if the fuel crisis is over?

Because steel pricing has nothing to do with fuel. Through the first half of 2026 the Anti-Dumping Commission stacked duties on imported steel, including up to 82 per cent on Chinese hot-rolled coil and a fixed 23.7 per cent rate on rebar locked in for five years. Local steel is priced against the landed cost of imports, so those duties lift the whole market, not just the steel that arrives by ship.

How much have building costs risen since COVID?

A new house now costs about 47 per cent more than it did before the pandemic, based on Master Builders Australia analysis of ABS data. The big surge happened between 2020 and 2024, when costs jumped more than 40 per cent. Prices eased after that but never came back down, which means every new increase in 2026 is stacking on top of a base that is already almost half again what it was five years ago.

What is driving copper and electrical cable prices up?

Structural demand. Copper broke through US$13,000 a tonne early in 2026, driven by electrification, grid upgrades, renewables and the data-centre boom. None of that is going away. In the ABS data, copper and aluminium drove the largest rise in metal products, which fed straight into electric cable and conduit. The hit lands hardest on electrical, plumbing and mechanical trades working late in the build sequence.

Should builders still be using fixed-price contracts in 2026?

It is worth a hard look. At the peak of the disruption, major Tier 1 contractors were abandoning lump-sum pricing in favour of cost-plus models with tender validity windows as short as 15 days. The volatility has eased since then, but it has not vanished. The safer approach is to know which of your costs are still moving, re-cost anything with meaningful steel or copper content, and consider escalation provisions on longer jobs rather than carrying all the risk yourself.

For more analysis like this, plus interviews with builders working through the same conditions, listen to The Good Builder Podcast and follow along at thegoodbuilder.com.au.

Last updated: June 2026. This article is general information only and does not account for the specifics of your contracts or circumstances. Builders should obtain independent advice relevant to their own situation.

Author: TGB Editorial