February 2022: war in Ukraine and the energy-cost transmission

Energy prices feed Australian inflation with a 3–6 month lag through transport, building materials and food. The Ukraine shock effectively guaranteed the RBA would hike, and hike fast. Two-year bond yields rose 60bps in three weeks.

Compounding for new-build investors: timber, steel and labour costs had risen 30–50% from contract pricing. Several Tier-2 builders entered administration through Q1 2022 — Probuild, Condev, and others. The 'fixed-price contract' risk became real.