“Home builders are still absorbing the last wave of material price hikes into fixed-price contracts. They simply don’t have capacity to take another hit,” said HIA Managing Director Jocelyn Martin.

“Fuel excise relief has been critical in containing costs across the construction supply chain. Removing it now, while diesel prices remain elevated, will push costs higher again.”

HIA said the scheduled end of the relief would lift diesel costs by over 10 per cent, flowing directly into construction through transport, logistics and on-site activity.

“Fuel is a core input - from earthmoving equipment and freight to tradies moving between jobs. When fuel costs rise, everything rises,” Ms Martin said.

“Changes in fuel costs flow through to many parts of the home building process and contribute to the overall cost of delivering new housing.”

The warning comes as the industry faces a convergence of new pressures, including a 4.75 per cent lift in award wages, budget-driven housing tax changes, and more complex superannuation obligations from 1 July.

HIA said that policymakers should consider the effect of rising transport and logistics costs on housing delivery, particularly at a time when Australia is seeking to increase the volume of new homes being built. 

“At a time when Australia needs 1.2 million new homes, the policy settings are moving in the wrong direction,” Ms Martin said.

“Treasury’s own modelling points to 35,000 fewer homes being built over the next decade directly due to the federal budget decisions.

“Government cannot afford to pile further costs onto an industry already under severe strain.”

While acknowledging longer-term infrastructure commitments in the federal budget, HIA said these would not ease immediate cost pressures or increase short to medium term supply.

“The industry needs relief now, not in a decade,” she said.

“A further three month extension of fuel excise relief is a practical, short-term measure that would help the industry absorb existing cost increases and avoid another price shock.

“Letting it lapse risks delivering another avoidable shock to builders, tradies and ultimately home buyers.

“While fuel costs represent only one component of overall construction costs, they remain an important consideration for businesses involved in the delivery of new housing and residential infrastructure.

“The industry will continue to assess the impact of changing fuel and transport costs on housing construction activity and supply," concluded Ms Martin.

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