Building costs rise at fastest pace in three years

30 October 2026

Today’s quarterly Producer Price Index data released by the ABS shows building cost pressures are accelerating again, with annual growth in construction inputs reaching the fastest pace in three years.

In the 12 months to September, input costs for house construction increased by 3.9 per cent. Over the same period:

• Electrical equipment rose by 14.5 per cent
• Plumbing products costs were up by 9.4 per cent
• There was a 5.0 per cent increase in non-steel metal products
• The cost of ceramics were 4.1 per cent higher.

Master Builders Australia Chief Economist Shane Garrett said the latest figures demonstrate that construction cost pressures remain firmly embedded in the economy.

“The cost of building a new home has increased by 53 per cent since the pandemic. It doesn’t stop at housing either, with the cost of building roads and bridges now 33 per cent higher and non-residential buildings nearly 40 per cent more expensive.

“While fuel surcharges due to the Middle East conflict have eased this quarter, they remained in place for most house builders across the country

“The ABS has also highlighted ongoing labour shortages, with demand for non-residential construction being driven by public infrastructure projects such as hospitals and schools, as well as private sector investment in data centres. This makes it even more important that we back our workforce with the skilled migration and domestic reforms outlined in our Blueprint report.

“The proposed duties placed on aluminium windows and doors from China will only make the picture worse. As we’ve seen in the United States, a tariff is a tax on the end consumer. It can only increase the cost of building.

“One window and door supplier has estimated that the cost of a $500,000 home build could increase by up to $26,500 as a result of these tariffs. According to Australian Trade Remedies Commission, window and door costs account for approximately 5 per cent to 7 per cent of total construction costs for a typical 3 to 4-bedroom dwelling with variations across states and dwelling types.”

Master Builders Australia Chief Executive, Denita Wawn said the story from the latest data is clear: the current policy settings are not working.

“The Federal Government needs to design a pathway out of this economic morass.

“The Government needs to rethink, reset and genuinely consult with the sector. Whether it is the duties on aluminium windows and doors, the ATO’s proposed credit card ban, changes to the taxation of trusts or new taxes on investment, the cumulative effect is reducing confidence, discouraging investment and making it harder to increase housing supply and building activity.

“We also urge suppliers to remove fuel surcharges as quickly as they were introduced so that cost relief can begin flowing through the construction supply chain.”

Media contact: Dylan Hafey, Adviser, Media & Government Relations

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