Clients and brokers face a tougher environment pricing construction loans, with new figures showing geopolitical conflict is adding fresh pressure to build costs.

Herald Sun and realestate.com.au report the cost of an average house build has jumped 1% since the Iran war began, a minimum of about $3,500–$4,000 on a standard four‑bed, two‑bath project. With the national average build cost at $522,537 in February, many builders are seeing hits "north of $5,000" on fixed‑price contracts.

Housing Industry Association Chief Economist Tim Reardon said the fuel‑driven increase alone is unlikely to derail demand, but when combined with rate rises it will "keep a lid on the number of purchases" of new homes this year.

Reardon still expects sales growth over the next 12 months, but at a slower pace as higher mortgage rates and construction costs bite.

On top of the immediate 1% jump, key suppliers are signalling around a 6% rise in build costs from 1 July, which would add more than $31,000 to the average new home if fully passed on.

The extra costs land as Australia is already behind its pledge to deliver 1.2 million new homes in the five years to mid‑2029, with completions more than 77,500 short of target.

SBS News notes that construction costs have already risen by around 1–5% this year, while data from ASIC show 3,490 construction companies went insolvent in 2025 – almost double the number in 2013. Master Builders Australia says many builders on fixed‑price contracts are being forced to absorb higher bills for fuel, concrete, and skip bins, with plastic piping products up 20–30%.