CommSec has released its quarterly State of the States: State and Territory Economic Performance Report, for which each of the states and territory economies was assessed on eight key indicators including economic growth, housing finance, dwelling commencements, construction work done, and equipment investment.
The report, now in its 12th year, found that the value of owner-occupier housing finance commitments (home loans) increased by 100.3 per cent in Victoria in May 2021 on the decade average, with the state retaining its top spot.
In the previous State of the States report, data showed that home loan values were up by 87.7 per cent in Victoria on the long-term average.
NSW came second (up 93.8 per cent), followed by the ACT (up 93.0 per cent) and Queensland (up 74.1 per cent).
Home loans have remained above decade averages in all eight states and territories, the same result as the previous quarterly report.
However, the Northern Territory remained the weakest for housing finance, with commitments 50.7 per cent higher than its decade average, while commitments were 57.6 per cent higher in Western Australia, 65.5 per cent higher in South Australia, and 63.7 per cent higher in Tasmania.
On an annual comparison, the NT ranked first, with commitments up 157.6 per cent, followed by Western Australia (up 150.9 per cent), Queensland (up 102.9 per cent), NSW (up 92.2 per cent), and South Australia (up 78.8 per cent).
The ACT has continued to record the slowest annual growth rate (58.3 per cent), followed by Tasmania (up 64.1 per cent), and Victoria (up 73.1 per cent), while overall across Australia, commitments rose annually by 88.4 per cent.
Tasmanian dwelling starts at 36-year high
South Australian dwelling starts in the March quarter were at 36-year highs, while they were at 27-year highs in Tasmania and 5.5-year highs in Western Australia.
Tasmania has retained its top spot for dwelling starts (the measure used was the seasonally adjusted number of dwelling starts with the comparison made to the decade-average level of starts).
In the March quarter, starts in Tasmania were 61.1 per cent above the decade average. However, the ACT has moved up from fifth to second with starts now 42.3 per cent above decade averages.
On the other hand, dwelling starts in the NT were 47.0 per cent below the decade average, followed by Queensland (down 6.3 per cent), and Victoria (down 3.2 per cent).
Dwelling starts in NSW rose by 5.3 cent, CommSec data showed.
Victoria was the only state to post an annual decline, with dwelling starts declining by 11.9 per cent, while the largest gains were reported in Western Australia (up 92.4 per cent), the NT (up 66.4 per cent), Tasmania (up 37.5 per cent) and South Australia (up 36.5 per cent).
Dwelling starts also increased in Queensland (up 16.1 per cent), and the ACT (up 6.5 per cent), but slumped by 14.2 per cent in NSW.
Annual dwelling starts across Australia rose by 13.1 per cent.
According to the report, dwelling starts are driven in part by population growth and housing finance, and can affect retail trade, unemployment, and overall economic growth. However, any overbuilding or underbuilding in previous years can impact current starts levels.
Victoria led the country for total real value of residential, commercial and engineering construction work completed in seasonally adjusted terms in the March quarter (12.8 per cent above its decade average), but in the NT, this was 69.6 per cent below the decade average.
Annual construction work declined by 0.8 per cent across Australia.
Equipment investment at record highs in Tasmania
Tasmania also led the pack in equipment investment in the March quarter where it was at record highs (up 52.3 per cent on the decade average), while NSW was second (up 9.88 per cent) followed by Western Australia (up 9.87 per cent), South Australia (up 7.3 per cent), and Victoria (up 1.2 per cent).
Equipment investment was at seven-year highs in Western Australia in the March quarter, while spending was the highest in more than two years in NSW and South Australia.
On the other hand, spending was down 8.1 per cent in the March quarter in Queensland, ahead of the NT (down 32.0 per cent), and the ACT (down 10.4 per cent).
On a shorter-run analysis, equipment investment in the March quarter was up on a year ago in five of the state and territory economies, up from two in the previous quarter.
Tasmanian equipment investment was up 47.0 per cent on the previous year, ahead of South Australia (up 15.6 per cent), Victoria (up 10.1 per cent), Western Australia (up 7.7 per cent), and NSW (up 6.6 per cent).
In contrast, new equipment investment was 13.7 per cent lower than a year ago in the ACT, behind the NT (down 10.1 per cent) and Queensland (down 7.6 per cent).
Across Australia, annual equipment investment increased by 5.6 per cent.
Overall, Tasmania held the mantle of the best-performing economy in CommSec’s report, leading on four of the eight indicators and ranking second on another two.
Commenting about the results, CommSec chief economist Craig James said: “Tasmania remains in top-position in the economic performance rankings. Tasmania leads the nation on four of the eight indicators assessed.
“It’s unlikely to face any challenge to its dominance on the key economic indicators for at least the next six months…
“It is important to note that all states and territories are performing solidly. That is no small feat in an environment dominated by COVID-19 with the frequent, but necessary, lockdowns and border closures.”
[Related: Victoria leads on loan commitments: CommSec]
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.