A buoyant property market propelled by new housing construction has seen NSW jump in rank from equal fifth to third spot in CommSec’s latest State of the States report.
The quarterly report, which showed double-digit annual home price growth in NSW and Victoria, stated that Western Australia continues to lead the rankings of best-performing economies, but in the last quarter there was little to separate it from the Northern Territory economy.
The report added that momentum in NSW is building, underpinned by stronger activity in home construction, although the upturn for its economy is still in its relative infancy.
Seven out of the eight top indicators of state economic performance are now above their 10-year average in NSW, with the state now the strongest in the nation for new housing construction, with dwelling commencements nearly 40 per cent above the state’s decade average.
“WA – while it was out in front by a country mile – has come back to the pack … WA is now very close to the Northern Territory and NSW. Really, the other states aren’t that far behind, and we’ve even seen a degree of improvement in Tasmania,” said CommSec chief economist Craig James, who added that NSW could soon push its way up into first or second position in the performance rankings.
Mr James said four of the states and territories – Victoria, WA, NSW and ACT – had housing finance figures above decade averages, while six had dwelling starts above decade averages.
A high-performing housing market has seen a surge in new construction in NSW, helped by low interest rates and strong demand, which has seen an 18.1 per cent spike in new dwellings started compared to 12 months ago.
Western Australia (up 10 per cent) climbed to top spot for housing finance on the decade average, with the next strongest Victoria (up 6.1 per cent), NSW (up 5.6 per cent) in third spot, followed by ACT (up 1.9 per cent). The Northern Territory remains the weakest for housing finance (down 21.6 per cent), with South Australia not far behind (down 13.3 per cent).
The Northern Territory economy continues to be largely propelled by commercial and engineering construction but is being checked by weaker growth in the housing sector, while home construction is still the fundamental plank of support for the Victorian economy, although rising unemployment clouds the outlook for the economy.
Although the outlook remains challenging for the Tasmanian and South Australian economies, CommSec said the hope is that property investors will soon switch attention away from NSW and Victoria to more affordable housing sectors.
“We’ve even seen a degree of improvement in Tasmania, and we expect this to continue as we see the housing market lift economies right across the board,” said Mr James.