Labor has questioned the need for a planned redevelopment of the Special Air Service Regiment Village, suggesting homes are being targeted for demolition because of merely minor faults.
Defence Housing Australia has told a Senate hearing the housing stock at Swanbourne's Seaward Village is old and costs almost twice as much to maintain as military homes in other parts of Perth.
The agency listed problems with some homes, citing sewage leaks, faulty smoke detectors, reticulation leaks and broken oven seals.
Shadow defence minister Stephen Conroy asked whether a whole house should be demolished for basic faults that affect most Australian homes.
"You don't knock down a house because the stove isn't working," Senator Conroy said. "These sound just like normal maintenance things to me."
The Abbott Government revealed this year it wanted to sell a quarter of Seaward Village for private homes to fund the construction of more than 100 new homes and apartments for SAS families.
Seaward Village is the so-called "marriage patch" of Defence homes adjoining the SAS Campbell Barracks.
The plan has alarmed SAS families, who fear they will be pushed out of the Swanbourne area. Some are also worried an encroachment of civilian homes on Seaward Village could compromise security.
During Monday night's hearing, DHA bureaucrats confirmed the new plan for Seaward Village could involve military homes sharing fences with private homes.
The army's special forces command is carrying out a security review of the redevelopment this month. There are claims new homes will overlook military homes and Campbell Barracks.
DHA told the Senate hearing it had commissioned research company Horizon to measure community opinion about the development.
The company paid locals $80 each to take part in the survey, but offered no money to military families who joined similar focus groups.
Nedlands council has signalled its opposition to the plan but the Federal Government will likely sidestep local approval processes and pursue the development directly with the State Government.
DHA has indicated it plans to build more than 100 new homes close to Swanbourne beach for sale to non-military families.
The sale of quarter of the village will pay for part of the redevelopment, but DHA is expected to chip in another $25 million to complete all building of new Defence homes.