SYDNEY—Snarled supply chains and labor shortages are adding fuel to some of the world’s hottest property markets, complicating efforts by central banks and regulators to cool them down.

In Australia, shortages of materials and supply disruptions have contributed to the average price of newly built homes recently rising at its fastest rate in 21 years, according to the Australian Bureau of Statistics. In the U.K., a lack of subcontractors including carpenters and electricians is driving rapid increases in wages. New Zealand’s...

SYDNEY—Snarled supply chains and labor shortages are adding fuel to some of the world’s hottest property markets, complicating efforts by central banks and regulators to cool them down.

In Australia, shortages of materials and supply disruptions have contributed to the average price of newly built homes recently rising at its fastest rate in 21 years, according to the Australian Bureau of Statistics. In the U.K., a lack of subcontractors including carpenters and electricians is driving rapid increases in wages. New Zealand’s government this month ordered its competition watchdog to examine the supply of building materials amid concerns about higher construction costs and housing affordability.

To protect profits, builders are passing on higher costs of materials such as steel and timber to their customers whenever possible, typically by charging more for newly built homes or renovation work. In doing so, they are adding support to property prices just as regulators worry markets are showing signs of becoming overheated against a backdrop of low interest rates.

More broadly, higher building costs are stoking inflation in countries wrestling with business closures related to Covid-19 restrictions, higher energy bills and port congestion. In New Zealand, the average price for the construction of a new house rose by 12% in the 12 months through September, according to government data, contributing to annual inflation rising at its fastest pace in a decade.

Lindsay Partridge, managing director of Australian building materials supplier Brickworks Ltd. , said shipping costs for bulk cement had risen fourfold in recent months, while the company almost ran out of manganese—used to color bricks—and had to switch suppliers even though that meant paying more.

“There’s only two suppliers, so if one hasn’t got it you go to the other. There’s no leverage,” he said, adding that Brickworks was passing on costs to customers as much as possible.

The risk is that central banks and regulators will move more aggressively to cool housing markets if prices remain stubbornly high, destabilizing the economic recovery from the Covid-19 pandemic in the process.

New Zealand’s central bank thinks home values have reached unsustainable levels, with one gauge pointing to price gains of more than 30% in the past year. On Wednesday, the Reserve Bank of New Zealand raised its benchmark interest rate to 0.75% from 0.50%, partly because of skyrocketing home prices.

A worker drilled at a residential and commercial project in Sydney in May.

Photo: Brendon Thorne/Bloomberg News

Reserve Bank of Australia Gov. Philip Lowe this month said Australian interest rates are very unlikely to rise until 2023 at the earliest but that regulators could need to tighten borrowing tests again if growth in household debt continues to outpace wages growth. Capital Economics, a research firm, recently named Australia among countries where the risk of a housing crash is elevated.

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Central banks appear confident they can rein in house prices using a mix of higher interest rates and other tools. “Members noted that higher mortgage interest rates, continued strong home building, tighter lending rules and changes in tax settings should all act to moderate house prices over the medium term,” the Reserve Bank of New Zealand said in minutes of this month’s policy meeting.

Still, rising materials costs and a shortage of laborers could make policy less effective if they force companies to slow or even stop construction projects, reducing future housing supply, said Shane Oliver, chief economist at AMP Ltd., an Australian wealth manager.

Australian home builder Tamawood Ltd. is one company turning down projects. Property demand is currently so strong that Tamawood could build twice as many homes if it had enough materials and labor, said Robert Lynch, the company’s chairman.

Mr. Lynch said the average cost of building materials such as timber and steel used by his company has risen by about 10% to 15% in the past eight months. Labor shortages have also worsened, with bricklayers charging as much for three days’ work as they previously had for a full week, he said.

“There are areas that we are finding it very difficult to get trades to go to,” Mr. Lynch said. “We’re curtailing any work in those areas and just easing back.”

Industry executives say prices of construction materials could stay high for at least a year, partly because it will take time for port logjams to clear. Flare-ups of Covid-19 cases also risk clogging up supply chains or spurring countries to tighten border controls again.

Australia this week said it would open its border to fully vaccinated skilled migrants from the start of December, while New Zealand expects to allow fully vaccinated foreign nationals to enter the country from the end of April. Australia’s Housing Industry Association, which represents home builders, doesn’t expect this will have much impact on the sector locally soon, given the scale of demand and because workers’ qualifications must meet local standards.

Also feeding a view that new home prices will stay high is the use of fixed-price contracts within the construction sector. To win a job, builders would agree to complete work for a defined cost and then absorb any increases in prices of items including plumbing supplies, windows and bricks along the way. Industry executives worry that some builders could be forced to complete projects at a loss and that others could be bankrupted, adding to supply constraints.

Tim Lawless, research director with property data firm CoreLogic Inc., said there was little for the construction industry to do but wait for supply chains to unblock. He cited the example of timber, which has more than doubled in price over the past eight months.

“It takes a long time to grow trees,” he said.

Write to Stuart Condie at stuart.condie@wsj.com