Commercial real estate fund manager MaxCap has released new research examining how global supply chain disruptions are affecting Australia’s construction sector, and what this means for private credit investors navigating 2026.
The report comes as the war in Iran and the closure of the Strait of Hormuz reshape the global economic outlook.
It sets out to answer the questions investors are asking, from the trajectory of energy prices to how rising costs are flowing through the construction sector and, ultimately, what it all means for private credit returns.
According to MaxCap, there is no quick fix on the horizon.
Even if the Strait were to reopen immediately, the next Persian Gulf shipment would still take around two months to reach Australian shores.
In the meantime, the report notes that supply disruption is already real, with higher input costs working their way through the domestic supply chain.
The research points to broad-based cost escalation across construction inputs.
Fuel prices have risen the most, though a temporary cut in fuel taxes has offered some relief.
Plastics, metals and chemicals are also recording significant price increases, adding to the overall cost base heading into the rest of 2026.
Even so, MaxCap characterises the current shock as milder than the disruption seen in 2022.
Supplier data cited in the report reinforces this picture. Reece and Tradelink, two of Australia’s largest plumbing and building product suppliers, have recorded 98 price increase notifications taking effect in the second quarter of 2026, with an average increase of 9.2 per cent, the highest since late 2022.
MaxCap’s modelling, drawing on both historical correlations between oil prices and construction costs and a more detailed input-output analysis of the residential construction sector, points to a moderate uplift of under 10 per cent in construction costs over the course of 2026.
That is well below the roughly 30 per cent cost uplift builders faced in the aftermath of the pandemic.
Profit margins are nonetheless coming under pressure from the combination of higher materials costs and elevated borrowing costs.
The report finds that builders are better placed to manage this squeeze than they were in 2020 to 2022, having largely moved away from fixed-price contracts and sharpened their cost management practices since that period.
For lenders, MaxCap argues the environment calls for closer monitoring of borrower cash flows at a time when input costs and interest rates are both elevated.
The report also notes that this is occurring alongside reduced competition in the lending market, as regulators scrutinise smaller and lower quality lenders.
For investors, the research frames the current backdrop as one of both risk and opportunity.
With inflation likely to stay higher for longer and interest rates following suit, MaxCap identifies floating rate credit as well-positioned to sustain returns, offering a natural hedge against the higher-for-longer rate environment while equity returns face greater pressure.
Overall, MaxCap concludes that the economic fallout from the war in Iran is likely to follow a familiar pattern, one running from elevated oil prices through to higher inflation and higher interest rates, with construction costs and builder margins caught in between.