Why the NSW economy is now Australia’s WORST while Tasmania goes from struggling to soaring – and house prices and the pandemic are to blame
- New South Wales last in the quarterly CommSec State of the States report
- This put it seventh, making it last among states but ahead of Northern Territory
- Worst result since 2012 as immigration suspension hurt NSW building approvals
- Tasmania came first again as a result of population growth from interstate
The closure of Australia’s border to foreigners is hurting New South Wales especially, sending it to the bottom of state economic rankings.
The Gladys Berejiklian-run economy came seventh in the ranking of states and territories under CommSec’s quarterly State of the States report for the March quarter – with only the Northern Territory performing worse.
Less than two years ago, NSW shared equal first place with Victoria but now has its lowest ranking since 2012.
The closure of Australia’s border to foreigners is hurting New South Wales even as national building approvals surge to record highs. Pictured are crowds at Bondi Beach in Sydney
State of the States league table
2. Australian Capital Territory
3. Western Australia
5. South Australia
7. New South Wales
8. Northern Territory
Source: CommSec analysis
The Australian Capital Territory came second overall while the Northern Territory came eighth or last.
CommSec chief economist Craig James said high immigration had been the key reason why NSW was either first or second place between 2014 and 2019.
The closure of Australia’s border to most foreigners since March 2020 has changed that, causing weak home building figures despite national dwelling approvals being at a record high.
‘Strong population growth creating demand for housing – that effect has waned and unless you have something in its place, clearly other states and territories are going to move past you,’ Mr James told Daily Mail Australia.
NSW was marked up for existing building activity but marked down for the slow pace of new construction approvals.
Victoria, while also affected by the suspension of immigration, came fourth by virtue of strong home borrowing.
Queensland was ahead of NSW as a result of stronger wages growth, while South Australia also benefited from population growth from other states.
Nationally, building construction approvals in February were at a record high since the Australian Bureau of Statistics began compiling the monthly data in 1983.
Approvals for new detached houses between December and February were 50.7 per cent higher than the same period in late 2019 and early 2020 just before the pandemic.
The Gladys Berejiklian-run economy came seventh in the ranking of states and territories under CommSec’s quarterly State of the States report for the March quarter – with only the Northern Territory performing worse
Development approvals surged as home owners sought to take advantage of the federal government’s existing HomeBuilder scheme that was due to run out in April 2021.
The program has since been extended until April 2023, further boosting the supply of new homes.
This will give owner-occupiers $15,000 subsidies if they spend at least $150,000 on a home renovation.
Tasmania came first as a result of strong interstate immigration – picking up many ‘expat’ Victorians in particular – which underpinned residential building activity.
Tasmania came first as a result of strong interstate immigration – a factor which was expected to underpin residential building activity
‘We’ve seen that in Tasmania with its population growth,’ Mr James said.
‘If there’s more people coming into the Apple Isle, that creates demand for homes, infrastructure demands and also retail spending.
‘It looks as though we’re going to start to see that in places like Western Australia and also in terms of Queensland.’
Western Australia was the big improver, climbing from sixth to third place overall thanks to strong population growth and surging iron ore prices boosting the mining sector.
CommSec chief economist Craig James said Australia’s border closure had weakened building approvals in NSW – even as they surged to record highs across Australia. Pictured is a Melbourne construction site