Fixed Prices, Rising Costs: How Australia’s Building Crisis is Worsening in 2026

Australia’s building crisis was already serious before the Middle East conflict pushed construction material costs up 28% to 36% overnight. In this episode of the Positive Property Show, George Markoski and Adam Albright work through the data behind the current construction collapse, why a second wave of builder insolvencies is likely, and what that means for anyone investing in property right now.

By the numbers: Australia’s building crisis

3,596 Australian construction firms collapsed in FY2024-25, the highest figure ever recorded, with NSW alone accounting for 1,567 of those insolvencies. That wave was driven by fixed-price contracts signed before costs spiked, thin margins that could not absorb the difference, and a supply chain that had not recovered from COVID disruptions. The construction sector is on track to record approximately 3,584 insolvencies in FY2025-26, only marginally below that record.

Now the sector is being hit again from a different direction. Pipe and fittings supplier Reece Group circulated a pricing notice in March 2026, advising customers of the following increases effective April 18, all directly linked to Middle East supply disruption:

• HDPE pipe and fittings: up 36%
• Twin wall corrugated stormwater pipe: up 31%
• PVC pipe and fittings: up 28.5%

One category from one supplier. Similar notices are moving through the broader supply chain. Builders running fixed-price contracts have no mechanism to recover those costs mid-project.

Why this matters for property investors

The 2026 Iran conflict disrupted crude oil supply through the Strait of Hormuz, spiking diesel prices and fuel levies across Australia and pushing up the cost of construction materials, plant, transport, and freight simultaneously. Builders who locked in contracts before the conflict are now carrying cost structures that have moved significantly since signing. Some will renegotiate. Others will not survive long enough to try.

The RBA’s rate settings are adding pressure from a different angle. Consumer confidence dropped to 63.1 in the week of March 23, 2026, its lowest level since 1972 according to ANZ-Roy Morgan, with mortgage holders recording the sharpest decline of any group.

Less construction starting. More builders exiting the market. Immigration still running at nearly 500,000 arrivals per year. George’s read is straightforward: Australia’s housing shortage is not easing. The building crisis is compressing it further, and replacement costs for new property are going up regardless of what happens to short-term sentiment.

What investors should do with this information

George’s position has not shifted. A property bought today cannot be replicated at the same cost in 12 months. Build costs do not reverse. Once materials prices move up and stabilise at a new level, they stay there. That dynamic supports the value of existing stock even as confidence falls and short-term demand softens.

For anyone holding property through this period, the data points one direction. For anyone sitting on the sidelines waiting for certainty, the supply picture suggests that window is shorter than it feels.

For the full stat breakdown and live Q&A, listen to this episode of the Positive Property Show.

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