Tasmania remains Australia’s top economic performer, but will this continue after COVID?

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Tasmania held the top spot in the CommSec State of the States for the eighth straight quarter, but 2022 is set to be a “very interesting year”.

Leading in four of eight indicators – investment in equipment, relative unemployment, retail spending and housing starts – Tasmania continues to be the best performing economy in the country.

CommSec’s methodology measures eight economic indicators against a state’s 10-year average.

Little separated the other states and territories before the emergence of the Omicron variant according to the report, but following the variant’s influence activity across the country, South Australia ranked second.

Victoria came third, followed by Western Australia, Queensland, New South Wales, ACT and the Northern Territory.

CommSec chief economist Craig James said Australia’s economies are in “solid shape”, well supported by strong fiscal and monetary stimulus.

Unemployment rates are historically low in much of the country,” James said.

“Workforce is scarce in many industries – reflecting current COVID-related self-isolation requirements and border restrictions.”

While Tasmania held the top spot and is “likely” to stay ahead in the short term, “a lot can change in 2022”.

“In fact, the economies of Western Australia and South Australia have moved up the rankings, posting strong performances during the pandemic, with the former benefiting from a surge in iron ore exports and prices, while the latter has benefited from significant government and corporate investment,” says James.

“In different ways, each state or territory will attempt to ‘live with COVID’ throughout 2022, which could lead to major changes in performance rankings.”

Queensland set to climb the ladder, Tasmania stay on top

Queensland ranked number five this quarter, but some pundits have predicted Queensland’s property boom is not over yet, which could see the Sunshine State climb up the ranks in the next quarter.

PRD Chief Economist Diaswati Mardiasmo said 2022 will see Tasmania and Queensland’s housing markets grow due to three key factors: falling starting prices, housing supply and rental yields.

“Tasmania and Queensland started with a lower price level than New South Wales and Victoria, so there is still room for [prices] grow,” Dr Mardiasmo told Savings.com.au.

“Prices in Tasmania and Queensland are still affordable… attracting interstate migration and investors.”

Dr Mardiasmo said the level of housing supply expected to be built in Tasmania and Queensland is “much lower” than NSW and Victoria.

“The supply of new accommodation is still limited, and yet the demand has continued and now we are opening international borders,” Dr Mardiasmo said.

“As a result, the imbalance between supply and demand will be felt more in Tasmania and Queensland.”

Dr Mardiasmo also said rental yields in Tasmania and Queensland continued to be higher than those in NSW and Victoria, while vacancy rates continued to be lower.

“Brisbane and Hobart, for example, have vacancy rates between 1-1.5%, while Sydney and Melbourne are 2-3%,” she said.

“As a result, rental occupancy is much faster in Brisbane and Hobart, which means faster cash flow for investors.”


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What will the next State of the States look like?

As for the future, Dr Mardiasmo said there are trends in NSW and Victoria that could potentially ‘change the landscape’.

“Tthere is an increasing number of people returning to both Sydney and Melbourne as restrictions are lifted, companies remove work-from-home flexibilities and ask workers to return to the office, and more jobs become available,” Dr. Mardiasmo said.

“We’re going to start to see an increase in [property] sales in these capitals and also greater absorption of rental properties. »

Dr Mardiasmo said the regional economies of these states are experiencing “exponential growth” due to infrastructure investment and trade growth.

“New South Wales and Victoria are ‘faster’ at this than Queensland and Tasmania, which is why you see a metropolitan-like feel in places that would be classified as regional economies,” he said. she stated.

Dr Mardiasmo also said that with the reopening of international borders – although each state has its own rules – Australian economies could benefit in several ways.

“In fgeneral, [new expats will arrive on] work and study visas, [so] places that have a strong appeal to international students will see the greatest impact in terms of changing housing demand and supply,” said Dr Mardiasmo.

“Regional areas that need workers and can tap into the work visa sector will also see the impact.

“Tourism will benefit as a second recipient, given that there are still restrictions on tourist visa entry.”

Dr Mardiasmo said there are generalizations that can be made about state of states, but that there is a different mix of demographics, economic structure, and government policies in each state.

She said this creates a “market within the market” situation.

“2022 is going to be a very interesting year – we’ll see nuances that we may not have seen or anticipated, but some will be quite obvious,” Dr Mardiasmo said.


Image by David Clode on Unsplash

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