Iran war: Fuel crisis ‘like Covid 2.0’ for struggling builders

Friday, 3 April 2026

Christchurch builder Peter De Gouw has bitten the bullet and absorbed the Middle East war-driven increases in fuel and freight costs, but there’s only so long he can continue to do so.

There was little choice when fixed-price contracts were at play, but higher material costs were starting to come through and he was bracing for the full impact of that, he said.

“For builders that are struggling already it could be the final nail in the coffin, but for those that are doing OK it’s an inconvenience, and will come off the bottom line.

“It might lead to the third year in a row making a loss, which is not the nicest, but it is survivable. It’s best to realise the impact and the cost, and work on solutions. What else can you do?”

Read more:

• Construction sector starting to feel economic headwinds of Iran war

• Iran war: Why construction is one of the industries hit first and hardest in a fuel crisis

• Five ways the Middle East conflict could impact NZ's housing market

He was more worried about fuel supplies being cut off, and supplies of imported building material running out if the crisis continued for a prolonged period.

There was not much anyone in New Zealand, including the Government, could do but as the country was a small player at the bottom of the world that was the norm, he said.

“That’s why we’ve developed the number 8 wire mentality, and it should stand us in good stead.

“But generally confidence in the industry has taken another knock. This situation is a real setback. It’s like Covid 2.0, it will have the same effect.”

De Gouw, who is director of Home Trends Builders, is not alone in his struggles.

Builders around the country are under huge pressure from rising costs — and the impact is accelerating, a new survey by the Combined Building Supplies Co-operative (CBS) has revealed.

The survey, which was completed by hundreds of CBS members nationwide, found that more than 84% had felt moderate to significant impact from fuel price increases over the past 30 days.

Builders were feeling the pressure most when it came to travelling to and from sites (86%), but delivery and freight charges (49%) and supplier price increases (48%).

More than two thirds (67%) of builders said suppliers had already increased pricing or introduced fuel-related surcharges, with increases ranging from 5% to 30% across key materials and freight.

But more than 60% of builders said they were absorbing the cost increases, with only a small portion fully passing them on to clients.

CBS chief executive Carl Taylor said the results showed costs were rising fast and builders were wearing them, with a particularly concerning trend emerging around fixed-price work.

“We’re hearing from builders who have locked in fixed-price contracts and are now being hit with rising costs they can’t recover.”

Beyond immediate cost pressures, builders saw profit margins (34%) and cashflow (20%) as the biggest risks, and there was growing concern around project viability and winning new work, the survey found.

Taylor said the industry was entering a familiar and dangerous cycle where costs built quickly, builders absorbed them, margins disappeared, and eventually it flowed through into higher prices.

The broader impact could be significant, and it evoked memories of Covid, he said.

“You start to see hesitation — clients pause projects, pricing becomes harder to lock in, and confidence drops. That’s when activity slows.”

It was a shame as continued fuel volatility could undo recent signs of stability in the construction sector following a prolonged downturn, he said.

“We were starting to see some balance return. This risks pushing the industry back into a tougher position.”

Marti Amos is chief executive of The Professional Builder, a coaching service for builders. He said rising costs were weighing on everyone, but were particularly tough for those without a strong pipeline of work.

Their member builders had seen diesel costs go up by more than $100 a week, and for those with a few vehicles for their business it mounted to a major price increase, he said.

“We hear young building apprentices are struggling to fill up their cars, that delivery costs charged by suppliers such as Mitre10, Bunnings and the like have gone up, and material prices are increasing too.

“If builders are locked into fixed-price contracts it affects the margins, and builders who don’t have a strong pipeline of work coming in will have to compete on price to get work, and that makes margins even tighter.”

Builders without good marketing and sales practices in place would struggle, and the situation would lead to more builders falling over, Amos said.

“But there is greater awareness that it's possible to reach out for help and support. We are currently getting about 100 calls a week asking for assistance, last year it was about 70 a week.”