Iran War Pushes Construction Material Prices Up 5-8%, Raising Fears of More Expensive Housing Contracts and Contractor Walkouts

The home construction market at the start of 2026 seems promising, with contract signings up 10%, reflecting that Thai people still desire to own homes. However, this momentum is being slowed by "rising costs" caused by conflicts between the U.S., Iran, and Israel, which have become a major negative factor directly affecting oil prices and supply chains in the second quarter.

Analysis of the impact on the construction industry.

The home construction sector is facing a so-called "soaring hidden cost" situation, arriving faster and stronger than expected, driven by two main pressures.

• Supply Chain Disruption: Many upstream raw materials are imported, and conflicts affecting maritime routes have caused sudden shortages of raw materials.
• Logistics Surge: Volatile oil prices affect not only fuel costs but also "shipping freight rates" and "material transportation costs" from factories to construction sites, representing hidden major expenses initially overlooked.

Recently, the Thai Home Builders Association (THBA), led by President Niran Phosri, warned of a "domino effect" if the situation prolongs. Small operators may face cash flow problems due to low bargaining power, while larger companies, despite stockpiling materials, will see profits erode, potentially stalling future expansion plans.

Impact spreads to "homeowners under construction."

For those planning or building homes in the second quarter of 2026, here is the reality you may face.

• Material prices are set to rise 5-8%. Be prepared for price increases on "bricks, stones, cement, sand," and prefabricated materials, driven by energy costs and opportunistic oil price hikes in some areas.
• The most alarming issue is contractors "walking off jobs." Contractors who accepted fixed-price contracts without risk allowances may be unable to bear rising costs, leading to work stoppages or business closures, affecting trust and delivery timelines.
• Flexible but more expensive contracts: Soon, home builders may implement Escalation Clauses allowing price adjustments based on material price fluctuations, meaning the price on your quote "may not be the final price" if global instability persists.

"No one expected the impact to arrive this quickly. The Middle East situation is no longer distant; it is seeping into every brick, stone, cement, and sand used in construction," said a source. 

"If the conflict continues without resolution and the government does not take measures to stabilize energy prices or manage construction material costs, we may see operators gradually closing, which will harm consumer confidence in the long term."

Defensive strategies for prospective homeowners.

To prevent the dream of building a home from turning into a nightmare, the association has offered guidelines for consumers and builders to adapt together.

1. Lock in prices quickly: Once you decide to build, signing contracts and ordering materials 1-3 months in advance is the best risk management approach.
2. Check the "financial health" of home builders: Choose companies that are financially stable and have good governance to reduce the risk of job abandonment during crises.
3. Communication is key: Be prepared to discuss plan adjustments or construction timelines if some materials become scarce due to global logistics problems.

The year 2026 is when "external factors" dominate over "internal factors." Despite strong domestic demand, the fragility of global energy costs forces builders and buyers to "stay afloat" through the second quarter, with "risk management" as the most crucial foundation. Even a small increase in costs today could mean higher debt burdens long-term if strategies are not adjusted promptly.

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