Each quarter CommSec attempts to find out how Australia’s states and territories are performing by analysing eight key indicators: economic growth; retail spending; business investment; unemployment; construction work done; population growth; housing finance and dwelling commencements.
The latest data shows Australia’s economies to be “in good shape but with some differences in relative performance”, CommSec reported.
“NSW remains on top of the economic performance rankings, solidly ahead of Victoria. Both states have relatively high population growth, underpinning home building and retail spending.
“Victoria remains clearly in second on the performance rankings with few changes over the past quarter.”
The ACT remains in third spot with solid improvement in the job market over the past quarter and continues to lead other economies on home loans, CommSec’s research found.
Tasmania’s ranking rose from fifth to fourth, backed by firmer business investment and a lift in population growth that was the strongest in six and a half years.
South Australia dropped from fourth to fifth, but rather than weakening, it lost fourth position to a strengthening Tasmanian economy.
Queensland remains in sixth position. Employment growth is the strongest in the nation in Queensland and the state is also still being buoyed by strong export activity, CommSec explained.
“The outlook for the Northern Territory is constrained by weak population growth and falling employment.” It remains in seventh position.
The outlook for the Western Australia economy is buoyed by stronger employment growth – the 3% annual growth rate is now just off the strongest levels seen in five years. Annual population growth has lifted for the past four quarters.
What's driving growth?
Population growth is an important driver of the broader economy, especially retail spending and housing demand. Only three states have population growth above long-term averages.
Tasmania is now on top, with its 0.64% annual population growth rate 15.8% above the decade average rate.
Victoria’s population growth is 14.2% above the decade average, followed by NSW, up 12.1%.
Jobs, spending, investment
NSW has the strongest job market in the nation.
NSW has maintained the top spot on the retail rankings, followed by Victoria. Solid activity in the housing sector, low unemployment and higher home prices continue to support spending.
NSW was the only state to show a positive trend in business investment (spending on new plant and equipment) in the latest data.
NSW remains in top spot for dwelling starts with commencements 53% above the decade average.
“Activity is easing – but only slowly – as demand is met. In the September quarter the number of dwellings started was 9.6% lower than a year earlier,” the CommSec report showed.
Home building remains mixed across the nation. The NSW market remains strong, responding to above ‘normal’ population growth and home building is also strong in the ACT and Victoria.
“By contrast, trend starts in Western Australia are at the lowest levels for over five years.”
Home price growth
In December 2017 six of the capital cities recorded annual growth of home prices. This result was in line with the report published three months ago for the month of September.
“But price growth is starting to ease in previously high-flying capital cities such as Sydney and Melbourne,” CommSec reported. “In December, Sydney home prices fell by 0.9% and Melbourne home prices fell by 0.2%.”
Annual growth in home prices:
- Hobart, up 12.3%
- Melbourne, up 8.9%
- Canberra, up 4.9%
- Sydney, up 3.1%
- Adelaide, up 3.0%
- Brisbane, up 2.4%
Home prices were lower than a year ago in:
- Darwin, down 6.5%
- Perth, down 2.3%
Construction work done
Leading the way was NSW with construction work done 25.9% above its decade average followed by Victoria with activity up by 25.2%.
“These states have consolidated their positions ahead of the Northern Territory due to solid home building and rising infrastructure demand.”
Commonwealth Securities Limited ABN 60 067 254 399 AFSL 238814 (CommSec) is a wholly owned but non-guaranteed subsidiary of the Commonwealth Bank of Australia ABN 48 123 123 124 AFSL 234945 and a Participant of the ASX Group and Chi-X Australia.