Building product inflation hits two and a half year high

1 May 2026

The cost of building materials rose by 2.5 per cent over the year to the March 2026 quarter according to today’s release of ABS Producer Price Indexes data. This is the largest annual cost deterioration since September 2023. The escalation partly reflects the increases in transport and production costs resulting from recent events in the Middle East as well as disruption to supply chains.

These price pressures reiterate the need for all supply chain stakeholders, including regulators, suppliers and transport operators, to ensure fuel surcharges are rolled back as swiftly as they were imposed when prices decline.

“Today’s figures don’t fully incorporate the effects of the Middle East crisis. Even so, they show that building materials cost inflation is gathering strength. The affordability of new homes is already deteriorating as a result, with the cost of a new house increasing by 4.1 per cent over the past year,” commented Master Builders Australia Chief Economist Shane Garrett.

“Almost every category of home building material has increased in price over the past 12 months. Electrical equipment is 6.3 per cent more expensive than a year ago while installed gas/electrical appliances cost 5.7 per cent more.”

Master Builders Australia CEO Denita Wawn says the Federal Government must do all it can to improve the affordability of building materials.

“Construction productivity is 21.5 per cent lower than it was just over a decade ago and continued escalations in labour and material costs will only make the situation worse. The Government needs a strong plan to address these pressures.

“Australia must support local manufacturing by reducing input costs while also not impeding the flow of good quality and compliant building materials from overseas.

“As outlined in our submission to the Senate Select Committee on Productivity, the market for building products and construction materials must be as competitive as possible to ensure choice, reliable supply and most importantly affordable prices,” said Ms Wawn.

Master Builders Australia’s federal budget roadmap outlines further policies to uplift construction,

• Investment incentives: offering accelerated depreciation for capital works and increases to the Instant Asset Write Off.
• Regulation reduction: streamlining the National Construction Code and commit to a radical red tape reduction across the board by at least 25 per cent as called for by the Alliance of Industry Associations.
• Workforce increases: investing in all apprentice training pathways and embracing skilled migration.
• Infrastructure investment: increasing private and public investment in housing enabling infrastructure.

Media contact: Dylan Hafey, Media Advisor

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