High cement prices to crane operations cost: How rising fuel prices hit Australia’s property market, choking new housing projects amid Middle East conflict

As the war in the Middle East rages on almost months after joined strikes on Iran by the US and Israel, rising fuel prices and high interest rates have hit Australia’s property sector, slowing it down and potentially hitting large homebuilders and residential developers as they are hampered by higher costs.

The uncertainty triggered by conflict in the Middle East and turmoil in international share and bond markets has dampened the outlook for new projects. The shifts prompted by tensions in the Gulf region are in line with the disruption from the last jump in interest rates and pandemic-related shortages.

According to the online platform Real Commercial, cost price inflation has taken off, and new housing schemes are under threat.

How is Middle East war impacting Australian property market?

The global fuel crisis erupted after Iran closed the Strait of Hormuz, a key oil route which connects the Persian Gulf to the Gulf of Oman, amid the war.

The move has sent costs for building materials and freight soaring by up to 30 per cent, putting tens of thousands of construction projects across the country at risk as contracts are torn up, according to News.com.au.

Diesel-powered tower crane operators are also facing an immediate impact to costs across Australia’s cities and regions.

What are builders and construction material companies saying?

“It’s a massive impact for us,” said Rob Pelligra from NSW Cement, the independent supplier of cement to ready-mix concrete plants across the state, as quoted by News.com.au. Pelligra said imported cement prices had risen by 15 per cent, while the local cost of converting clinker into cement had increased by 10 per cent.

“Then you’ve got your trucking prices roughly running at about 12-15 per cent on that as well,” he said. Fuel's added a significant amount of money onto the tonnage rate that obviously gets passed down to the end user. Companies like mine, smaller independents, are probably worse for wear. We’re sort of forced to wear it.”

Brad Duggan, chief executive of Metricon Homes, said the revitalised business was cash rich and, for now, largely insulated from cost pressures due to its 12-month fixed-price contracts with both customers and suppliers.

“As each day goes by the risk of that increases, but at this point in time we’re not seeing a significant amount of pressure in this space,” he told news.com.au on Wednesday (March 25, 2026).

Rider Levett Bucknall Oceania director of research and development Oliver Nichols stated that the immediate impact of the conflict on the construction and property sectors was higher transport and logistics costs. “Rising oil prices are already flowing through fuel, freight, shipping and insurance, with suppliers and carriers implementing fuel surcharges,” he said, as quoted by Real Commercial.

Higher energy costs are driving up the price of materials, especially oil-linked products like plastics, steel, cabling and bitumen, with supply chain disruptions and longer lead times further compounding the pressure. “Uncertainty is also slowing contract negotiations, as builders and developers reassess cost risk and pricing assumptions,” Nichols said, as quoted by online platform Real Commercial.

The firm said crane operations were particularly exposed to higher fuel prices, as most are diesel‑powered. “While it’s too early to say whether this will lead to widespread project delays, it does increase the risk of deferrals or re‑sequencing, particularly for marginal projects,” Nichols said.

Nichols noted that construction overall remained optimistic, with the national crane count dipping slightly from 845 to 838.

Crane numbers are now 5 per cent below the 2023 peak. According to reports, Sydney had 346 cranes in operation, dipping from 370 in the third quarter. Work in Melbourne shifted from residential to civil and data centre construction. In Melbourne, the total picked up to 207 from 199, driven by a surge in civil projects, according to the website Financial Review.