January 28, 2025 — In a recent sign of resilience and growth, Western Australia has emerged as the top-performing state in Australia according to the latest CommSec State of the States report, released today. Relying on eight key indicators: economic growth, retail spending, equipment investment, unemployment rates, construction activities, population growth, housing finance, and dwelling commencements, the report paints a glowing picture of the state's economic landscape.
Western Australia, which constitutes almost one-third of Australia’s land area, secured the top spot in five categories: retail spending, relative unemployment, relative population growth, housing finance, and dwelling starts.
Economic landscape in Western AustraliaWestern Australia is a significant contributor to the Australian economy, contributing over 17% of the Gross Domestic Product.
Western Australia’s economy is primarily driven by its key industries: mining, agriculture, and tourism. The state is abundant in natural resources. Large mining, oil, and gas companies such as Woodside, Santos, BHP, Rio Tinto and Fortescue Metals operate numerous facilities in the region, solidifying its wealth in resources.
The agricultural sector of Western Australia encompasses pastoralism, horticulture, forestry, and fishing. The state is renowned for producing high quality grains, meat, wool, and oilseeds, which are much demanded in international markets.
Meanwhile, Western Australia’s picturesque landscapes and rich cultural heritage have made tourism a significant contributor to its economy. Its pristine beaches, the rugged outback, and UNESCO World Heritage sites like the Ningaloo Reef have made it a go-to destination. The Margaret River region stands out as a hub for tourism, blending viticulture with agriculture.
Strong retail and housing market amidst rising interest ratesAccording to the State of the State report, Western Australia recorded impressive growth in retail spending. The strong level of retail spending continues even as the Reserve Bank of Australia has increased its official interest rate thirteen times since May 2022—rising from 0.10% to 4.35%—to combat inflation.
In the housing sector, Western Australia has seen significant growth in house prices, particularly in Perth. According to the Western Australian Government, the median established house price in Perth reached $776,500 in the September quarter of 2024—25% higher than the same period a year prior. The rest of the state observed substantial price increases as well, with median established house prices at $490,000, 18% higher year-on-year.
Population growth: a vital economic driverWestern Australia’s population growth has played a crucial role in its economic expansion. As of June quarter 2024, the estimated resident population reached 2.97 million, reflecting a 2.8% rise from the previous year, surpassing the national growth rate of 2.1%, data from the WA Government shows. This increase resulted from a combination of net overseas migration, a natural increase in population, and interstate migration. The total population in Australia was 26.64 million in 2023.
Forecasts from the WA Government anticipate a continued population growth of 1.8% in the coming year, further bolstering the state's economy.
Challenges on the horizon: commodity prices and economic resilienceDespite these successes, challenges remain for Western Australia. Prices for key export commodities from Western Australia have seen a decline from their peaks. For instance, as of November 2024, iron ore prices dipped to $100.5 per tonne, significantly lower than values observed in previous years. However, the gold price has shown resilience, trending upwards and currently standing at $2,651 per troy ounce.
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