South Australia makes it three-in-a-row as the best-performing economy in the recently released CommSec State of the States Report. Western Australia is vying for the top spot, rapidly gaining momentum with impressive relative population growth and home lending metrics. Victoria continues its recovery with strong economic activity.
Released quarterly, the report helps investors see the relative economic health of regions across Australia. Using the most up-to-date economic data available, the report ranks each state and territory on eight key indicators: economic growth, retail spending, business investment, unemployment rate, construction work done, population growth, housing finance and dwelling starts. This provides a comprehensive overview of each state’s performance not only in terms of their economy, but also their potential for investment.
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Compiling such factors as population growth and residential construction activity, the latest CommSec State of the States report shows that Victoria is rapidly catching up to top-ranked South Australia.
South Australia has secured the top spot for the third consecutive time in the latest CommSec State of the States report. Leading in relative economic growth and boasting the lowest unemployment rates, the state also excels in construction work completed and new dwelling starts, demonstrating its overall economic resilience and strength.
South Australia’s robust economic growth is being driven by strong interstate and international investment, increased consumer spending, and heightened business confidence. While the Australian economy grew 0.1% in the March quarter of 2024, South Australia’s economy surged ahead with a 0.6% expansion, making it the standout performer.
South Australia’s low unemployment rate also signals a strong job market, which is essential for maintaining a stable property market.
Western Australia, the nation’s second-best performing economy, has experienced a population boom with a 3.3% annual growth rate, almost a full percentage point higher than the national average. With workers flocking to Western Australia, the demand for housing has gone up, and so too have property prices. Furthermore, strong retail spending underscores a robust local consumer market willing to invest in the state’s economic future.
Western Australia is now the top state when it comes to increasing home loan values. With average home loans in the state now up by 37.8% over the past year, Western Australia is seeing significant growth in its property market.
Victoria demonstrates remarkable economic resilience with a 1.2% growth over the past year, driven by strong population growth, low unemployment rates, and increased construction activity.
Population growth is a strong driver of both economic growth and demand for housing. Victoria’s 2.78% annual population growth rate makes it the second-fastest growing state in the country, after Western Australia. In the coming decade, Victoria’s population is expected to grow by an average of approximately 125,000 each year. With Melbourne already Australia’s most populous city, this will further add to the demand for housing in the state.
Last year, the CommSec State of the States Report had these three states all tied in fourth place. However, this year saw some changes in their rankings.
New South Wales (NSW) has dropped to fifth place, with its economic growth rate slowing down over the past year. Led by finance, tourism, population growth and strong construction activity, Sydney remains a major financial hub and the slip in rankings is not a cause for concern. The state’s 2.2% job growth, 2.6% boost to construction activity, and 6.3% annual growth in home values helps underpin the state’s strong economic performance over the long term.
When considering all eight indicators collectively, Queensland, ranked fifth alongside Western Australia, exhibits the strongest economic momentum. It also boasts the second highest annual growth in home prices, which have increased by 15.8%. With its always solid tourism industry and natural resources sector, Queensland is a strong player in the national economy.
The Australian Capital Territory (ACT) has maintained its fourth-place ranking and continues to have the highest level of economic growth in terms of annual trend growth rate. The ACT also leads the way in terms of retail spending, signalling strong consumer confidence and a healthy job market. Due to its stable economic foundations in public administration and professional services, the Australian Capital Territory should be seen by investors as a strong and consistent performer.
The CommSec State of the States Report serves as an invaluable tool for property investors looking to find opportunity in the dynamic Australian market. With South Australia leading the way for the third consecutive year, buoyed by its strong job market and robust construction activity, it emerges as a prime target for investment. Meanwhile, Victoria and Western Australia show significant potential, driven by their impressive population growth and economic performance. Even states like New South Wales, Queensland, and the ACT, despite variations in rankings, present solid opportunities thanks to their diverse economic strengths and steady market indicators.
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