Aukus set to further fuel Australia’s hottest housing market

[SYDNEY] Australia’s massive defence spending under the Aukus agreement is poised to further fuel the nation’s hottest housing market, Perth, according to property group Ray White.

Around A$25 billion (S$21 billion) is due to be poured into the state capital of Western Australia over the next decade, including upgrades to the Henderson shipbuilding precinct and HMAS Stirling facility. This is predicted to generate 10,000 construction jobs and a further 3,000 linked to the submarine base.

Property prices in Perth are already on a tear, fuelled by population growth, tight supply and a robust local economy. Western Australia, the heartland of the nation’s mining industry, has had several resource booms in recent decades.

Data from Cotality shows Perth home prices jumped 7.4 per cent over the past three months, the fastest pace among major cities, and have surged 87.2 per cent over the past five years, narrowly ahead of Brisbane. Sydney, the nation’s most expensive market, has risen 37.4 per cent since 2020.

“Aukus is unlikely to deliver a mining-style boom, but it does add another layer of demand to an already tight market,” Nerida Conisbee, chief economist at Ray White, said on Monday (Dec 1). “For Perth, the key story remains the same: demand continues to rise, supply continues to struggle, and prices continue to respond.”

The Aukus pact with the US and UK will see Washington provide Australia with conventionally armed, nuclear-powered submarines to help counter China’s growing security presence in the Asia-Pacific. The three nations will then cooperate to manufacture a new model nuclear submarine, SSN Aukus, which is planned to enter service in the 2040s. BLOOMBERG