Property prices have been powering the news cycle of late as they start to reach astronomical levels. But what’s behind the increases? A new economic report from the Commonwealth Bank answers some of the questions.

New South Wales is officially the Premier State in the national economic rankings. Its population growth has pushed it to the top of the CommSec State of the States list, followed by Victoria, which is also gathering steam as it attracts more people who need to be housed.

Population growth leads to more homes being built and bought and there’s an associated lift in retail spending.




“Population growth is good – that’s creating demand for housing, creating multiplier effects through the economy,” CommSec Chief Economist Craig James says. “Victoria has got its ranking up to number two because of the strength of the housing area and population growth, which is the strongest in the nation.”

Victoria also has the fastest annual economic growth rate in the nation, up by 2.9% on a year ago, ahead of Western Australia with 2.7%, the Northern Territory and the ACT (1.9%). In contrast, Queensland’s economy is down 0.9% on a year ago, while South Australia is up just 0.6% and Tasmania is up 1.1%.

CommSec based it rankings on eight key indic­ators – economic growth, retail­ spending, investment in equipment, levels of employment, construction work done, population growth, housing finance and dwelling commencements.

Mixed news on home loans

The surge in loans for investment properties is showing up in three of the states and territories – ACT, Victoria and NSW – where trend housing finance commitments are above decade averages.

Housing finance is not just a leading indicator for real estate activity and housing construction but it also is a useful indicator of activity in the financial sector. With interest rates at record lows, it’s not a surprise that investors are buying into the perceived safety of bricks and mortar.




And in four of the eight economies, trend commitments in May were above year-ago levels – ACT, Victoria, NSW and Queensland.

The ACT has now taken top spot for housing finance, with the number of commitments 10.4% above the long-term average. Next strongest was Victoria, up 10.1% on the decade average.

NSW has slipped from second to third spot on housing finance, up 7.9% on the decade average, followed by Western Australia (down 5.7%).

NT leads economic activity

If you thought that would neatly translate to the economic activity rankings, you’d be wrong. Heading that list is the Northern Territory, followed by West Australian and the ACT, then Victoria and NSW.




Remember, though, this is measured against decade averages and on that scale, the Northern Territory is more than 40% above its “normal” or decade-average level of output.

Then follows Western Australia, up about 24%, the ACT (up 14.6%), then Victoria and NSW (up 10.6%).

State by State breakdown


NSW has top ranking on three indicators: retail trade, population growth and dwelling starts. The lowest ranking is fifth on overall economic growth.



Victoria is best on housing finance and population (second ranked). But the weakest position is on equipment investment (fifth).


Northern Territory

The NT is top on four indicators: construction work done, equipment investment, economic growth and unemployment.


West Australia

West Australia is ranked second on three indicators: economic growth, retail spending and construction work done.



Queensland does best on retail spending and equipment investment (fourth). But the state is fifth or sixth on the other indicators.



ACT is strongest on housing finance but seventh on overall construction work done and eighth on equipment investment.


South Australia

South Australia is highest ranked (third) on population growth and equipment investment. But SA is eighth on the jobless rate and construction work done.



While Tasmania does best on unemployment (third ranked) it is seventh or eighth ranked on five criteria.


Finding investment opportunities is a matter of knowing where to look. The same applies to finding the funding to take those opportunities.

You know where we are.

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