House Construction Input Costs Rose 3.9% in a Year, the Fastest in Three Years, With Electrical Gear Up 14.5%. Here's How Builders Should Re-Price Now.

Building costs are climbing again

The latest Producer Price Index numbers from the Australian Bureau of Statistics, released on Friday 30 October, show cost pressure on builders is picking up rather than easing.

Master Builders Australia's read of the ABS September quarter data is blunt: input costs for house construction rose 3.9 per cent in the 12 months to September, the fastest annual pace in three years.

| Input category (12 months to September) | Change | | --- | --- | | Input costs for house construction, overall | +3.9% | | Electrical equipment | +14.5% | | Plumbing products | +9.4% | | Non-steel metal products | +5.0% | | Ceramics | +4.1% |

Source: Master Builders Australia, citing ABS Producer Price Indexes, September quarter 2026.

What the ABS says is driving it

For the quarter, the ABS said input prices for house construction rose 1.0 per cent, driven by higher raw material, freight and fuel costs, together with ongoing supply chain disruption linked to the Middle East conflict.

Plumbing products were the largest contributor, as petroleum-based products such as plastic and resin rose after crude oil price increases. Other metal products and electrical equipment were also major contributors, which the ABS linked to high copper prices.

Fuel surcharges stayed in place for most suppliers through the quarter, the ABS said, pushing up delivery charges for transport and energy-intensive materials such as concrete.

What builders are charging: output prices

On the output side, which tracks the prices builders receive, the ABS said building construction prices rose 1.3 per cent in the quarter and 4.9 per cent over 12 months.

| Building class | September quarter change | | --- | --- | | House construction | +1.0% | | Other residential building construction | +1.3% | | Non-residential building construction | +1.7% |

The ABS said stronger growth in other residential and non-residential work was moderated by slower growth in house construction prices, which it put down to weaker demand. Non-residential demand is still being driven by public works such as hospitals and schools, and by data centres in the private sector, with labour shortages showing up in the concrete, mechanical and electrical trades.

In other words: input costs on a house are rising faster than the prices house builders are able to pass on. That's the margin squeeze in plain sight.

What Master Builders said

Master Builders chief economist Shane Garrett said the figures show "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," he said. "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."

Garrett also pointed to the proposed duties on Chinese aluminium windows and doors. He cited one window and door supplier's estimate that a $500,000 home build could cost up to $26,500 more because of them, and noted the Australian Trade Remedies Commission's figure that windows and doors make up about 5 to 7 per cent of total construction costs for a typical three- to four-bedroom dwelling.

Chief executive Denita Wawn said "current policy settings are not working", listing the window and door duties, the ATO's proposed credit card ban, changes to trust taxation and new taxes on investment. She also urged suppliers "to remove fuel surcharges as quickly as they were introduced so that cost relief can begin flowing through the construction supply chain".

The desk moves for builders

1. Re-price open quotes. If you're quoting off a price book set earlier in the year, check it against current supplier pricing, especially for electrical, plumbing and metal items, which carried the biggest annual rises in this release.

2. Check your rise-and-fall position. Fixed-price residential contracts leave the builder carrying cost movements. Review which jobs on your books are fixed price, which have a cost-escalation or rise-and-fall clause, and what your state's home building laws allow before you sign the next one. Get advice from your industry association or a construction lawyer before changing contract terms.

3. Ask suppliers about fuel surcharges. The ABS said surcharges remained in place for most suppliers in the quarter. Master Builders is calling for them to come off. Ask each major supplier in writing when theirs will be reviewed, and track it on your next invoices.

4. Lock in electrical and plumbing early. With electrical equipment up 14.5 per cent and plumbing products up 9.4 per cent over the year, it may pay to confirm pricing and order timing on these packages earlier in the job.

5. Watch the window and door duties. If your jobs rely on imported aluminium windows and doors, talk to your supplier about how securities or duties are being passed through, and allow for it in quotes until the case is settled.

6. Watch the labour side too. The ABS flagged skilled labour shortages and wage pressure, particularly where infrastructure and data centre work is pulling concrete, mechanical and electrical trades. Lock in key subcontractors early on jobs that overlap with big local projects.

What to watch next

The ABS has said the construction index reweight is planned for the December quarter 2026 release. The next PPI figures will show whether fuel-linked costs keep easing or whether copper, plastics and labour keep pushing prices up.

Sources: ABS Producer Price Indexes, Australia, September quarter 2026; Master Builders Australia, 30 October 2026. This article is general information, not legal or financial advice.