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The national economy is slowing. Growth eased to 2.1% over the year to June and we expect around 1.5% by year-end, with a final rate rise to 4.60% likely in November. Business investment is doing the heavy lifting, particularly the data centre build, while households stay cautious. Housing is the clearest common thread: national prices have now fallen for five straight months and are 3.6% below their peak, with a 9% peak-to-trough decline expected before the market stabilises in 2027. Labour markets are holding up and remain the main source of resilience. Conditions still differ markedly by state. The CommBank State of the States report1 breaks down the data for each state and territory – see each snapshot below.
Queensland
Queensland is the standout performer. Demand grew 3.8% over the year, the fastest in the country, led by a construction boom. Home building is up 16.8% and business investment 9%. The labour market is tight, with unemployment of 4.1% among the lowest nationally. Household spending is the soft spot, slowing to 1.9% as housing costs bite. Brisbane prices have doubled since early 2020, making it the second least affordable capital, and the market has now turned: three consecutive monthly falls, with homes taking 35 days to sell against 15 in January. We expect an 8% peak-to-trough decline.
Western Australia
Western Australia remains one of the more balanced economies in the country, with no obvious weak point. Demand grew 3.6% over the year, second only to Queensland, and household spending was up 2.4%. The caveat is population. WA has the fastest population growth nationally, which flatters the headline figures, and spending per person actually fell slightly. Perth housing has turned after an exceptional run: prices more than doubled since late 2019, the largest rise nationally, but have now fallen four months straight, with homes taking 22 days to sell against nine in January. An 8% peak-to-trough decline is expected.
Northern Territory
The Northern Territory spans both extremes. It leads the country on household spending, up 2.6% over the year, and home building rose 15.5%. But business investment fell 6.6%, the weakest nationally, as construction on the Barossa gas project rolls off, with engineering work down 47.5%. The Territory's investment cycle is dominated by single large projects, and the latest one has just finished. Darwin housing is the national outlier. Prices rose 18.2% in 2025, the strongest of any capital, and are still rising while other markets fall. We expect modest further gains this year before a 7% peak-to-trough decline.
New South Wales
New South Wales is a tale of two economies. Business investment surged 19.4% over the year, the strongest in the country, driven by the data centre build. NSW accounts for just over half the national pipeline. Outside that, conditions are soft. Household spending grew just 1.6%, the weakest nationally. Sydney sits at the centre of the housing downturn: prices fell 1.4% in August and are 7.1% below their February peak, and we expect a 13% peak-to-trough decline, the deepest of any capital and one of the sharpest in twenty years. Sydney also remains the least affordable capital to buy in.
South Australia
South Australia's economy is being carried by the public sector. Government investment rose 17.9% over the year, against just 1.3% across the rest of the country, driven by defence and a large infrastructure pipeline. Wage growth of 3.6% is now the fastest in the country. The private side has yet to match it. Business investment and consumer spending are both middling, and home building has gone backwards. Adelaide housing has also turned, with three consecutive monthly falls after an 8.6% gain through 2025. We expect an 8% peak-to-trough decline, in line with Brisbane and Perth but well short of Sydney.
Australian Capital Territory
The ACT has one of the more polarised profiles in the country. Its labour market is the tightest anywhere. Unemployment of 4.0% is the lowest nationally, underpinned by the Commonwealth public service, and household spending and wage growth are both solid. Construction is the offset. Home building fell 17.5% over the year, the weakest in the country, reflecting a sharp drop in approvals through 2024. Canberra housing is weak too: prices rose just 4.8% in 2025, the softest of any capital, and we forecast a 7% fall in 2026 and a 9% peak-to-trough decline, closer to Sydney and Melbourne than the mid-sized capitals.
Victoria
Victoria is treading water. The bright spot is construction. Non-residential building rose 22.3% over the year, the fastest in the country, as the data centre build ramps up, and Victoria accounts for around a quarter of the national pipeline. The labour market is the concern. Unemployment has risen to 4.9% as jobs growth fails to keep pace with a fast-growing population. Melbourne housing offers little offset: prices fell 1.1% in August and are 6.5% below their peak, with a 12% peak-to-trough decline expected. Melbourne has risen only 8% since early 2020, leaving households without the wealth cushion other capitals enjoyed.
Tasmania
Tasmania has had the toughest year. Demand fell 3.2% over the year, the only contraction in the country, though much of that is arithmetic (public investment dropped 41.2% after a ferry-related surge the year before). The more genuine concern is the labour market, where unemployment has risen from 3.8% to 5.1%, now the highest nationally, and employment is down 1.3%. Household spending is the one clear support, up 2.1%. Hobart housing has been comparatively steady: prices rose 7.2% in 2025 and we expect them flat across 2026, with a 7% peak-to-trough fall, the shallowest of any capital alongside Darwin.
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1 CommBank GEMR – CommBank State of the States – September 2026
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