Australia defence spending intensifies pressure on Perth housing market as AUKUS projects drive jobs and demand.
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| Medium-density homes in Sydney’s western suburbs are pictured on January 11, 2024. Photo by Jenny Evans/Getty Images |
Australia defence spending boosts Perth housing market as Western Australia prepares for a decade-long surge in infrastructure investment linked to the AUKUS security pact. The government’s multibillion-dollar commitment is set to transform the state’s capital city by injecting new jobs, expanding defence facilities, and intensifying pressure on a property market already struggling to keep pace with fast-growing demand. Analysts warn that the scale of upcoming projects could reshape Perth’s economic landscape while worsening affordability challenges for prospective homeowners.
Under the AUKUS agreement with the United States and the United Kingdom, Australia has committed to one of the most significant defence overhauls in its modern history. A central component of this realignment is the development of submarine and naval infrastructure in Western Australia. Over the next 10 years, more than A$25 billion is expected to flow into key defence locations, including the Henderson shipbuilding precinct and HMAS Stirling, the nation’s primary naval base on Garden Island.
The infusion of funding is designed to support the construction, servicing, and deployment of nuclear-powered submarines that Australia will acquire from the US and later co-develop through the trilateral partnership. For Western Australia, this wave of investment marks another period of rapid economic expansion, following decades shaped by large-scale mining development, iron ore exports, and resource-driven employment cycles.
But unlike previous booms tied to commodities, the AUKUS program is expected to create a different type of economic ripple. Defence-related facilities require specialist skills, long-term construction projects, and continuous staffing, resulting in a steadier but still substantial lift in job creation. Ray White chief economist Nerida Conisbee estimates that about 10,000 construction jobs will be generated during the upcoming development phase, with an additional 3,000 positions connected to submarine operations and the broader naval ecosystem.
Even before the confirmation of long-term defence spending, Perth was already home to Australia’s fastest-growing capital city housing market. A combination of strong migration flows, a resilient labour market, and limited housing supply has created a competitive environment where prices continue to rise faster than in other metropolitan areas.
New data from Cotality shows that home values in Perth increased 7.4 percent in the past three months alone—outpacing Brisbane, Adelaide, Sydney, and Melbourne. Over the past five years, prices have surged 87 percent, making Perth one of the strongest performers nationwide. Analysts note that while the city remains more affordable than Sydney or Melbourne, its rapid acceleration in recent years has made purchasing increasingly difficult for first-time buyers and families who depend on stable rental conditions.
Australia defence spending boosts Perth housing market by adding a powerful new layer of demand that did not exist in previous growth waves. The prospect of thousands of additional workers entering the region—many with specialized skills and higher wages—has heightened concerns about whether existing construction capacity can keep up. Perth’s rental vacancy rate has hovered near record lows, and new housing supply has been repeatedly slowed by labour shortages, high material costs, and logistical backlogs.
Conisbee argues that the AUKUS pipeline will not replicate the explosive activity seen during mining peaks but will still exert upward pressure on property values in a market already struggling to balance supply and demand. In her assessment, Perth’s core challenge remains unchanged: the city is simply not building fast enough to match its economic momentum.
The AUKUS agreement, announced in 2021, represents one of the most ambitious trilateral defence partnerships in the Indo-Pacific region. Under the pact, Australia will receive Virginia-class nuclear-powered submarines from the United States beginning in the 2030s. The three nations will then jointly produce a next-generation nuclear submarine known as SSN AUKUS, slated for introduction in the 2040s.
While the defence partnership is primarily positioned as a response to China’s expanding regional presence, its domestic economic impact is becoming increasingly apparent. Australia defence spending boosts Perth housing market not only by attracting new workers but also by expanding long-term infrastructure needs in Western Australia. Shipyards, submarine support hubs, and defence technology facilities will require continuous upgrades and staffing, making Perth one of Australia’s critical national security centres for the coming decades.
For many local businesses, this shift offers unprecedented opportunity. Engineering firms, contractors, maritime suppliers, and technology providers are preparing for a sustained increase in demand. Employment agencies in Perth have already begun adjusting their recruitment strategies to source labour with defence-specific qualifications, anticipating shortages in key trade areas.
As Australia defence spending boosts Perth housing market stability for property-owners, concerns are emerging about the long-term implications for affordability. The influx of defence-linked workers could tighten competition in suburbs near the Henderson and HMAS Stirling precincts, pushing prices higher in Rockingham, Kwinana, and surrounding coastal neighborhoods.
Developers are considering new projects, but many face delays due to shortages of carpenters, electricians, and plumbers—challenges that have persisted since the COVID-19 pandemic disrupted global supply chains. The lack of available land close to transport routes and employment hubs has also complicated efforts to expand housing stock at the required scale.
Local councils have begun preliminary discussions on how to support infrastructure demands associated with these defence projects. Some are exploring zoning updates, expanded public transport links, and incentives to fast-track residential construction. However, many planners emphasize that such measures will take time to implement, meaning Perth’s housing pressures could worsen before they improve.
Residents divided
Community response to the AUKUS expansion remains mixed. Some residents welcome the economic stability and job creation associated with new defence infrastructure, acknowledging that Australia defence spending boosts Perth housing market resilience and promotes regional development.
Others worry that rising prices will displace lower-income families, intensify rental stress, and reduce housing access for essential workers in education, healthcare, and public services. Several advocacy groups have called for government intervention to ensure that growth benefits are distributed more evenly across the region.
Real estate experts predict that Perth will remain one of Australia’s strongest markets throughout the coming decade, but they also warn that without significant investment in housing construction, expanding defence projects could amplify inequality between established homeowners and prospective buyers.
With A$25 billion committed to Western Australian defence infrastructure, the next ten years are expected to bring deep and lasting changes to Perth’s economy, labor landscape, and housing conditions. The link between national security priorities and domestic development is clearer than ever, as Australia defence spending boosts Perth housing market dynamics and reshapes local planning decisions.
As AUKUS-related projects advance, Perth is navigating a complex balancing act between maintaining affordability and harnessing the economic benefits of long-term defence growth. The outcome will shape the region’s trajectory well into the 2030s and beyond.
