Why the Iran war means your building contract matters more than ever
If you're about to sign a building contract in Australia right now, there's something happening on the other side of the world that could cost you tens of thousands of dollars.
What's actually happening with construction costs in Australia right now
Since late February 2026, the conflict between the US, Israel and Iran has sent shockwaves through global oil markets. The Strait of Hormuz, where 20% of the world's seaborne oil passes through, is essentially at a standstill.
Here's what that looks like in real numbers:
Diesel has surged ~70% since the conflict started.
Crude oil is up 55%
Plumbing suppliers hiked prices 35% overnight
PVC pipe is up 27%
Concrete now carries a national surcharge
Contractors are slapping on fuel levies
This isn't a small impact. Shipping routes have been rerouted, freight costs are up 30 to 40%, and containers that used to cost a set amount carry emergency surcharges on top.
The flow on effect to your new home build? Analysts are forecasting a 4 to 6% increase in total project costs, and that's the conservative scenario.
The assumption that's putting homeowners at risk
Here's what most people building right now believe:
"My contract is industry standard. That means I'm protected."
I hear this every single week. And every single week, I open up a contract and find the opposite.
Industry standard doesn't mean safe. It means the builder is using a template that was designed to work for them. The template itself isn't the risk. The details are.
Think about it this way. Your contract has clauses about price adjustments, variations, provisional sums, extensions of time, and what happens when material costs change. These clauses existed before the Iran conflict. But right now, in this market, they matter more than they ever have.
And if you haven't had someone walk through those clauses with you, you're essentially signing a document that gives your builder flexibility to pass on cost increases, while you carry the financial risk.
What homeowners try (and why it doesn't work)
Most people who are nervous about their contract try to read through it themselves. They Google or ask AI some of the terms, try to make sense of the language, and eventually convince themselves it looks "pretty standard."
That feels responsible. That feels like enough.
But here's what they miss: the risk in a building contract isn't in the obvious stuff. It's in the interaction between clauses. It's in how provisional sums are structured, whether progress payments are front loaded, what triggers an extension of time, and whether liquidated damages actually protect you or just look like they do.
Reading it yourself won't catch that.
Why this moment is different
Before the Iran conflict, construction costs were already escalating.
Now layer on top:
PVC pipe escalation
Electrical cable up 15 to 25%
Bitumen and asphalt up 20 to 30%
Steel up 5 to 10%
If your contract doesn't have clear caps on variations, if your provisional sums are vague, if there's a rise and fall clause that lets the builder adjust pricing based on market movements, you could be looking at tens of thousands in unexpected costs.
And here's the thing that keeps me up at night: most people don't find out until the invoices start coming in.
What your building contract can actually do for you (that nobody talks about)
This is the part that surprises people.
Your building contract isn't just a formality. It's actually one of the most powerful tools you have in your entire build. When it's set up properly, it can:
Limit your exposure to price increases
Prevent payment schedules that put you at financial risk if something goes wrong mid build
Protect you from open ended extensions of time
Give you real transparency on what triggers a variation and how much it can cost
Make sure your builder can't claim for delays that arent fair
I've reviewed hundreds of contracts across HIA and Master Builders templates in VIC, QLD, SA and WA. In almost every single instance, there are things that need to be negotiated, clarified, or flagged before you sign.
Not after. Before.
Because once you sign, you've agreed to everything in that document. And "I didn't know that clause was in there" doesn't hold up when the builder sends you a variation for $15,000 because PVC pipe went up 30%.
What to do before you sign your building contract
If you're building in Australia in 2026, getting your contract reviewed isn't a ‘nice to have’ anymore. It's essential.
Not a quick read through. A proper, construction focused review that looks at:
How extra costs are handled
Whether your progress payments are balanced
What happens when material costs change mid build
How extensions of time and liquidated damages actually work in your specific contract
Whether there are clauses that quietly allow cost increases to be passed onto you
That's exactly what I do in a Building Contract Health Check.
I go through your contract clause by clause, flag the risks specific to your build and this market, and give you clear recommendations you can take to your builder before you sign.
Because understanding your contract isn't just helpful right now. It's a superpower.
If you've got a contract sitting in front of you and you're not 100% sure what you're agreeing to book a Building Contract Health Check first.
