Fuel Surcharges Raise Building Costs in Sydney Residential Projects

Fuel surcharges tied to the Middle East conflict have increased costs for residential builders in metropolitan Sydney. 9 per cent on multiple materials and services. Rocco Natoli and his wife Jo operate a family business constructing small apartment blocks for David Reid Homes.

On a current six-storey project in southern Sydney, Natoli said fuel-related charges have affected gyprock, concrete, waterproofing, cranes, skip bins and insulation. 9 per cent. Natoli estimated the surcharges will add roughly $15,000 to the gyprock portion of the job over the next six months.

Concrete deliveries now carry fuel levies of up to $12 per cubic metre. Natoli calculated an additional $10,000 for the 800 cubic metres used on the current project, with a smaller surcharge expected on the final floor. Waterproofing made from petroleum derivatives carries a temporary 7 per cent surcharge. Natoli said this item will add approximately $2,000 to the build.

9 per cent increase citing manufacturing price rises. Natoli estimated an extra $2,000 from this change. PVC pipe costs are projected to rise by about 30 per cent according to earlier ABC reporting. Most pipe for the current project is already installed.

Crane fuel use of 960 litres has triggered a $1,152 levy. Skip bin removals, used three times weekly, now cost an additional $36 each, adding $108 per week.

Natoli estimated total fuel surcharges and price rises will reach $100,000 on the project. Fixed-price contracts leave him responsible for the added costs. The Housing Industry Association said conflict-related price rises will add up to $4,000 to a typical kit home build.

Managing director Jocelyn Martin stated that fixed-price contracts give consumers certainty but place risk on builders. Reserve Bank governor Michele Bullock said building costs are contributing to inflation and reducing the viability of high-rise projects.

She noted the situation will worsen housing supply constraints. Natoli said some surcharges may remain after fuel prices ease. He expects future project quotes to reflect the higher baseline costs.