Rate rise and supply chain disruptions hitting builders

17 March 2026

Today’s decision by the Reserve Bank to raise interest rates to 4.1 per cent will hit building and construction extremely hard. This rate rise comes on top of surging fuel prices and disrupted supply chains that will increase the cost of construction.

Master Builders Australia CEO Denita Wawn said the rate rise, fuel cost increases, and supply chain disruptions were critical risks to the work underway to increase housing supply and affordability.

“Today’s rate hike makes investment in new housing less attractive, adds more financing pressure, especially on high density projects, and makes the National Housing Accord target harder to reach.

“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.

“Now is not the time for the Federal Government to consider, let alone introduce, policy changes that will result in less new housing being built. Proposals on the table to change negative gearing and the CGT discount are yet another threat to supply.

“Policy measures to make housing more affordable are also 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.

Media contact: Dylan Hafey, Media Advisor

0497 330 064 | dylan.hafey@masterbuilders.com.au