Unfortunately, we are experiencing another significant impact on the construction industry, so Sustainable® would like to share the current critical updates and impacts.
Increasing cost pressures, supply chain disruptions and interest rates
On the back of another interest rate hike, the current tensions in the Middle East have placed considerable pressure on the global economy, energy prices and supply chains, creating a period of heightened uncertainty. This evolving geopolitical situation is now impacting the Australian economy, and more directly, the building and construction industry.
With rising fuel costs and ongoing supply chain disruptions, combined with the recent decision by the Reserve Bank to raise interest rates to 4.1 per cent, this is already placing further significant strain on the building and construction industry and driving-up construction expenses, which is directly affecting construction project costs and timeframes on existing contract agreements.
All our major suppliers have advised they are already experiencing critical building material delivery delays and will be introducing additional charges to offset the sharp increase in fuel costs and delivery, along with the instant cost increase on most materials, especially plumbing, steel and concrete.
I am sceptical about the 26c reduction per litre in fuel costs as it may just be consumed in coming weeks, as it was last week, with further input costs for suppliers.
All our suppliers and subcontractors have gone off Contract Rates and are on Cost Plus Engagements, impacting Sustainable® exponentially.
Please note, whilst Sustainable® and some of our suppliers are doing their best to try to absorb these additional costs, I can assure you that this is a rapidly evolving situation and should these extenuating circumstances continue to escalate, our Team and our supplier’s current positions may be reviewed as we are also not immune to the ongoing pressures.
Unfortunately, at this stage, this means contract timeframes are tentative and uncertain if supplier materials, both with placing orders and deliveries, continue to be delayed and slowed down with the current global supply chain environment.
We will continue to closely monitor the situation with direct advice from our suppliers and industry membership associations. Should you have any questions regarding the above information, please contact the Head Office on (07) 3201 1177.
With Regards, Brett McKenzie – CEO | Sustainable Pty Ltd
ADDITIONAL INFORMATION
For additional information, we encourage you to read the following excerpt from Master Builders Australia CEO, Denita Wawn, on 17 March 2026.
“Builders around the country have been getting hit with fuel and product surcharges as a result of the Middle East conflict, with cost increases on inputs including transport and concrete.”
“Supply chains are also being disrupted, including for materials such as tiles and plastic. These cost pressures, on top of higher interest rates, will further delay the supply of new homes.”
“As we saw during the pandemic, when prices surge and supply chains are disrupted, the viability of many building companies comes under threat due to fixed price contract arrangements.”
“Even before this current crisis, a new house was 47 per cent more expensive than it was just before the pandemic. This interest rate hike plus the global instability will only make the situation worse.”
“Policy measures to make housing more affordable are central to the battle against inflation, with the increasing price of housing being the largest contributor to inflation. A laser focus on increasing supply and increasing affordability is key,” said Ms Wawn.
HOUSING INDUSTRY AUSTRALIA (HIA) ALERT
International situation and current market impacts update 25 March 2026
‘HIA is aware that the current situation continues to evolve both domestically and internationally, and members have been receiving a range of advice from suppliers on cost increases to several building materials and other related construction equipment such as skips, plant and equipment hire.
Members have expressed concern about the impact to construction project costs as well as the availability of materials and the effect this has on home building contracts, given the uncertainty of the evolving situation in the Middle East and causing large spikes in domestic fuel prices.
HIA is tracking this situation closely and we are in active discussions with Federal and State Governments and construction material suppliers, highlighting members’ concerns and discussing potential measures to mitigate and minimise impacts on current and future projects, including shoring up the supply of key building materials, investigating the prioritisation of fuel and material supply to essential industries, if fuel rationing is to occur, and advocating for Governments to place a minimum 6-month pause on any new industry regulations.
Whilst the situation continues to evolve, we are recommending members:
- Monitor price increases and adjust quotations accordingly, where appropriate.
- Have an open conversation with homeowners on project timings and costs given current volatility of the market.
- Consider project scheduling and timings, where appropriate.
- Consider the most appropriate contract and contract terms to use for the scope of work and changing conditions. This could include using prime cost and provisional sums for labour and materials or a cost-plus contract. In some States/Territories ‘rise and fall’ clauses can be included in fixed price contracts to provide for adjustments where there is a shift in the cost of materials due to unforeseen circumstances. Drafting and applying these clauses is complex and we recommend seeking legal advice prior to using a ‘rise and fall’ clause.’
