Construction work to accommodate a booming population has pushed Victoria above New South Wales as the nation’s top-performing economy, according to a new report.
CommSec’s quarterly State of the States report on Monday named Victoria No.1 for the first time since the rankings began in 2009.
NSW dropped to second place after four years in the top spot.
“While NSW has the strongest job market in the nation and is showing good economic growth, a number of housing indicators softened this quarter, including home loans and spending on new plant and equipment,” CommSec chief economist Craig James said on Monday.
The report takes into account economic growth, retail spending, equipment investment, unemployment, construction work done, population growth, housing finance and dwelling commencements.
It ranks how each economy is performing compared to its “normal”, looking at the decade average.
Victoria was ranked first in three indicators, while NSW took the top spot in two.
But the report said there was little separating the two economies.
Victoria added almost 400 people a day in 2017, taking its population up 2.3 per cent – the highest growth rate in the nation. The population growth was 11.2 per cent above its 10-year average.
That pushed up construction, especially of new homes.
Economic growth in Victoria was 26.5 per cent above its normal, just above NSW where it was 25.7 per cent.
Retailers performed narrowly better in NSW, thanks to solid home building, low unemployment and infrastructure building.
The state still holds the top spot for relative performance on unemployment.
But some housing indicators contributed to it slipping from the top spot.
“There’s a really strong job market in NSW but we have got signs of maturation in terms of the housing market, fewer dwellings being commenced [construction] and likely to be completed over the next 12 months,” Mr James said.
NSW Treasurer Dominic Perrottet said the government was proud of its economic achievements since 2011.
“We have turned the state from the basket case left by Labor into the economic powerhouse of Australia,” Mr Perrottet said in a statement to The New Daily.
“CommSec has identified population growth as boosting Victoria’s economy through home construction beyond normal levels.
We were ahead of the game in this area in NSW by boosting housing supply to tackle affordability several years ago. The Victorians have been playing catch up.”
Victorian Treasurer Tim Pallas welcomed the report, saying it confirmed what the state Labor government already knew.
“We’re determined to build on this, to maintain our strong economic position and continue to invest in the major infrastructure that is critical for a growing state.”
The ACT was top ranked on relative housing finance and equipment spending. The national capital was ranked second on population growth and unemployment.
Tasmania was ranked first on the relative position on population growth, which is driving the construction of homes. Tasmania has the fastest annual pace of economic growth, up by 7.5 per cent on a year ago.
Queensland edged past South Australia on the back of stronger population growth.
SA’s unemployment trend was the lowest since 2012 in trend terms, while equipment growth was the country’s worst.
Strong construction and economic growth numbers couldn’t budge the Northern Territory from seventh with weak retail and job figures hurting.
Equipment spending and population growth in Western Australia were the highest in the past two years. But the weak job market and lagging retail spending helped cement it in bottom place.
The full list:
- South Australia
- Northern Territory
- Western Australia
The New Daily contacted NSW Treasurer Douglas Perrottet.