Renovation and construction costs: What you need to know

If you’ve been thinking about a renovation or new build, you’ve probably noticed that the financial picture feels a little uncertain right now. You’re not alone — it’s one of the most common questions we’re hearing from clients at the moment. Here’s an honest look at what’s driving costs, what it means for your project, and how to put yourself in the best position regardless.

After a period of relative calm through 2024 and into 2025, construction costs are on the move again. The main culprit is fuel. Rising fuel prices — driven in part by ongoing global tensions — are flowing through the entire construction supply chain. Virtually every stage of a build relies on fuel in some way, whether that’s manufacturing materials, transporting them to site, or running equipment during the build itself.

What this looks like in practice is higher freight and logistics costs, rising prices for core materials like steel, concrete and plastics, and fuel-related surcharges being added by suppliers that ultimately land on the client’s quote. These pressures are real and they’re happening now, not at some point down the track.

For anyone planning to build or renovate in 2026, there are a few things worth keeping in mind.

First, quotes may not stay valid as long as they used to. Builders are managing rapidly changing input costs and many are shortening the window during which a quote is locked in. If you receive a quote you’re happy with, don’t sit on it.

Second, your contingency budget probably needs to be larger than you’d normally allow for. The standard 10–15% buffer that builders recommend in stable conditions may not be enough if material costs keep shifting during your project. Having a bit more breathing room can save a lot of stress down the line.

Third, timelines could be affected. If supply chain disruptions continue, delays in materials can flow on to your overall schedule. It’s worth having that conversation with your builder upfront so you’re not caught off guard.

While you can’t control what’s happening in global markets, you can control how well-prepared you are on the finance side. A few things to think about:

Sort your finance early — it’s one of the best things you can do. Knowing your borrowing capacity before you commit to a project means you can make decisions with confidence, not guesswork. It also puts you in a stronger position when negotiating with builders.

Construction loans work differently to standard home loans – your lender releases funds in progressive drawdowns at each stage of the build. Structure your loan to match your project timeline from the start, and you’ll avoid headaches down the track.

It’s also worth thinking about whether staging your renovation makes sense. Breaking a larger project into phases can help spread costs over time and give you more flexibility if the market shifts during the process.

Uncertainty in the market doesn’t mean you should put your plans on hold indefinitely – it means planning matters more than ever. Having a clear picture of your budget, your borrowing capacity and your contingencies gives you a much stronger foundation to move forward from.

If you’re thinking about a renovation or build and want to work through the numbers, feel free to get in touch. It’s a free conversation that could save you a lot of uncertainty later.