Fuel price increases are showing up directly in construction cost data, with the most pronounced effects hitting trades that are most dependent on diesel-powered plant and machinery. QV CostBuilder’s Martin Bisset has identified fuel as the primary cost driver in the current environment, noting that excavation, piling, and demolition trades have seen the sharpest increases as diesel prices respond to global oil market and supply chain pressures.
Excavation costs alone jumped 7.8% in a single month during the peak of recent price increases — a movement that carries through into substructure and earthworks budgets for projects across the residential and commercial sectors.
Materials: A Mixed Picture
Beyond fuel, the materials market is showing differentiated trends. Plasterboard, insulation, and timber products are rising in price. Copper and steel pipework, by contrast, have declined. The overall picture Bisset describes is a balanced market with increased uncertainty — cost growth that is still relatively moderate overall but with a higher level of volatility that makes forward pricing more difficult.
He characterises the current fuel-driven increases as likely temporary, expecting prices to normalise as global supply pressures ease. For contractors, though, the timing risk is real: a project priced before the increases and delivered during them absorbs the difference.
Consents Are Trending Up
Against the cost pressure backdrop, consent volumes provide a more encouraging signal. In the year to February 2026, 37,534 new homes were consented nationally, a 12% annual increase and the seventh consecutive month of rising consent numbers. Multi-unit housing led growth, with townhouses and flats up 15%, apartments up 34%, and standalone houses rising 7.8%.
Auckland recorded 15,972 consents for the period and Canterbury 7,721. February 2026 alone saw 3,168 consents, a 23% increase on the same month the previous year. It is worth noting that consents represent intent to build rather than confirmed construction activity, and the gap between consented and commenced projects remains a feature of the current market.
What This Means for Tendering
For contractors preparing tenders in this environment, the combination of rising diesel costs and a recovering consent pipeline creates a dual challenge: input costs are moving while the volume of work beginning to flow through from the consent uptick is not yet sufficient to support significant pricing power. Building appropriate allowances for fuel escalation into tenders — and including escalation mechanisms where contracts permit — is the most defensible approach.
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