Rising diesel costs threaten to push building prices higher for borrowers
Construction inflation remains modest on the surface, but sharp increases in diesel prices are starting to push up key trades and site works, according to the latest QV CostBuilder update.
That development comes amid a softer demand backdrop, with March sales volumes down 2.4% year on year and national median values edging just 0.3% higher over the quarter and still 1.3% below a year ago.
Across more than 11,000 material price movements in six main centres, elemental and trade rates rose by an average of just 0.3% between March and April 2026, masking much larger moves in fuel‑intensive work.
Diesel prices jumped 37.6% in a single month and are up 109.8% since February, feeding directly into excavation, piling and demolition costs. Excavation recorded the largest monthly rise among trades at 7.9%, while piling increased 1.6% and demolition 1.3%. On the elemental side, site preparation rose 2.2%, with substructure and exterior works both up 1.9%.
QV CostBuilder spokesperson and quantity surveyor Martin Bisset said fuel had clearly taken over as the main driver of construction costs this year.
“Fuel has really become the dominant cost driver in recent months. That’s where the most upward pressure on construction costs is coming from currently,” Bisset said.
Pressure building beneath subdued headline inflation
Bisset noted that fuel’s impact tends to be more pervasive than other inputs because of how widely it is used on and off site.
“What makes fuel different to other inputs is how broadly it feeds into the construction process – from machinery on site through to transport and materials – so the impact tends to build over time rather than show up all at once,” he said.
That lag effect raises the risk that current budgets and valuations understate future build costs, particularly on projects heavy in earthworks and external works.
Bisset cautioned that the current numbers may not fully capture the underlying cost pressures.
“The key thing is that price pressure is building, even if it’s not fully reflected in headline cost increases just yet. Hopefully this will still be a short‑term spike and price pressure will eventually ease,” he said.
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