AUSTRALIA construction input costs

Material pricing has remained broadly stable in recent quarters

Materials and equipment costs

Material pricing has remained broadly stable in recent quarters. However, escalating geopolitical tensions have increased volatility across global energy and shipping markets, contributing to higher fuel and freight costs.

Source: Turner & Townsend ANZ market intelligence report H1 2026

The data indicates the early effects of the US–Iran conflict, with fuel-related cost pressures beginning to offset the broader disinflation observed in construction materials in previous quarters. This is most evident in materials with higher energy intensity or greater exposure to international supply chains.

Given the typical lag between movements in global commodity and energy markets and their reflection in construction price indices, current data is likely to understate the full extent of this impact. Further upward pressure on material costs is expected over the coming quarters, as increases continue to pass through supply chains.

These pressures are already influencing procurement and pricing behaviour. Some suppliers have introduced fuel surcharges to recover higher transportation and operating costs. Rising fuel prices are increasing the cost of plant and equipment operation, material transportation and manufacturing processes. At the same time, ongoing market volatility is driving more cautious pricing across the supply chain.

The extent of these impacts will vary by project type, construction methodology and exposure to fuel-intensive activities.

Construction labour

Skilled labour shortages are expected to remain a key challenge for Australia's construction sector over the outlook period. While labour market conditions have eased in some regions and sectors as activity has moderated, shortages persist across a range of specialist trades and engineering disciplines. The scale of the infrastructure, energy and construction pipeline is expected to sustain competition for skilled workers in the coming years.

Although increasing Vocational Education and Training (VET) completions and recent immigration reforms should support workforce growth, labour supply is unlikely to fully meet demand during peak delivery periods. As a result, labour constraints are expected to continue placing pressure on project delivery, costs and programme timelines.

Source: Turner & Townsend ANZ market intelligence report H1 2026

Construction wage growth has remained relatively stable, generally ranging between 3.0% and 4.0% since mid-2022. This reflects ongoing demand for skilled labour and enterprise bargaining agreement (EBA) outcomes that continue to support wage increases across the sector.