Queensland has taken over as Australia's strongest-performing state economy, unseating Western Australia in the latest CommBank State of the States index, with South Australia the biggest mover of the quarter.
The quarterly index, compiled from ABS data across six indicators including household consumption, business and dwelling investment, and unemployment, ranked Queensland first in the June quarter – up one place on the previous quarter and three places over the year. Dwelling investment rose 16.8% annually, the strongest in the country, while business investment increased 9%.
CommBank economist Harry Ottley (pictured) said the result reflected broad strength rather than a single factor, noting it was "about consistency rather than one single standout result."
That marks a shift for a state that continues to grapple with a housing supply shortfall even as investment activity accelerates.
Western Australia dropped two places to third, having held the top ranking in four of the past six quarters. It remains the most balanced performer of any jurisdiction, ranking between second and fifth on every measure, with dwelling investment up 7.4% and business investment up 6.6% over the year.
South Australia jumped two spots to second, driven by the strongest public demand growth in the country at 5.6% and annual wage growth of 3.6%, though dwelling investment in the state fell 1.8%.
Tasmania ranked eighth after recording the largest annual fall in the standings, with public demand declining 5.7% over the year – though this is largely a base effect following a recent surge after the government purchased Spirit of Tasmania ferries. The state's unemployment rate rose to 5.1%, the highest in the country.
The Northern Territory remained seventh, combining the country's strongest household consumption growth and second-strongest dwelling investment with the weakest business investment and wage growth.
The ACT ranked fifth, with Ottley noting it has low unemployment and solid household spending, but that "construction is moving in the opposite direction, with dwelling investment falling sharply after a period of strength."
New South Wales slipped to fourth, with business investment surging 19.4% over the year on the back of data centre activity, even as household consumption growth of just 1.6% was the weakest nationally.
The report links that divergence to housing costs, noting a dual-income household buying a median-priced Sydney home now spends around 31% of its pre-tax income on the mortgage – the highest share of any capital city.
Victoria came in at sixth position, with government and business investment providing relative strength, though household consumption growth of 1.6% was the second weakest nationally and the state's unemployment rate rose to 4.9%, the second highest in the country.
Ottley drew a direct contrast between the two eastern states: "In Victoria, investment and public demand are providing support, but the household side remains soft, and the unemployment rate has moved higher."
For brokers with clients across state lines, the rankings point to diverging conditions: continued dwelling investment momentum in Queensland and WA, against affordability constraints weighing on borrowing capacity in Sydney.
Ottley said data centre investment was "becoming an increasingly important part of the investment story," particularly in NSW and Victoria.
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