Step 1 · Macro: pick the right state, not just the right suburb

Why Step 1 isn't optional

A buyer who picks a suburb before picking the state is solving a smaller problem first. The state-level decision moves more dollars per percentage point than any suburb selection inside that state. NSW vs QLD on a A$1.2m purchase, holding everything else constant, has historically swung the 5-year IRR by 4-7 percentage points depending on the cycle position when the buyer entered.

Step 1 (Macro) picks the state. Step 2 (City) picks within the chosen state: capital vs regional, demand corridor vs commuter belt. Steps 3-5 zoom into suburbs, pockets, and properties. Skip Step 1 and the rest of the playbook is solving a 95-percent-confidence problem at the suburb level inside a 50-percent-confidence problem at the state level.

The macro filter has three inputs. Where in its cycle is each state. What's the policy setting. Where are the demographic and economic flows pointing.

Cycle position: what the data says, state by state

Property cycles in Australia don't run in lockstep. Sydney and Melbourne tend to lead. Brisbane, Adelaide and Perth tend to lag by 18-30 months. Hobart, Darwin and the ACT run on their own clocks driven by smaller economies. The buyer's question at Step 1: which state is mid-cycle, which is running hot (and likely to mean-revert), which is cooling (and likely to bottom soon)?

Three signals to read together:

• Median price growth, 36 months trailing. Above 50% over three years is the empirical mean-reversion line. Past that level, forward growth slows as affordability ceilings bite. The propautopilot factor library treats 50% as the strict ceiling for individual suburbs. The same logic applies at state level with a slightly higher tolerance band (state averages smooth more).
• Median price growth, 10 years trailing. Captures whether the state is mid-cycle or late-cycle. Above 80% over 10 years is the empirical late-cycle marker. Affordability is stretched, mean-reversion risk is meaningful, and forward returns are usually below historical average.
• State-level demand-supply pressure. Building approvals, vendor-discount, days-on-market and auction-clearance, averaged across the state, combine into a single read on whether buyers or sellers hold the upper hand right now.

The buyer doesn't run these manually. The propautopilot suburb explorer surfaces the state-level read on the front page; cycle position rolls up from the underlying suburb data weekly.

Policy setting: what the state government changed this year

State property policy moves materially every year. The 2026 settings worth checking before committing to any state:

• Stamp duty schedules. NSW threshold caps changed in 2024. VIC's first-home concession tapers above A$600k. QLD's foreign-buyer surcharge sits at 8% as of 2026. Run the per-state stamp-duty calculator from Chapter 2 for the buyer's exact bracket. The numbers shift A$10-20k per state on the same purchase price.
• Land tax thresholds. State land-tax-free thresholds change yearly. NSW dropped its threshold to A$1.075m for the 2026 land-tax year. QLD broadened to count interstate-owned land in the assessment. VIC tightened the trust assessment. Investors comparing states need the land-tax position factored in before the suburb decision.
• Rental policy. Rent-cap rules vary materially. ACT and VIC have stricter caps. QLD adjusted notice-of-increase periods in 2024. WA has the lightest investor-side rules. A buy-and-hold investor's net yield depends on which state's tenancy framework applies for the next 10-20 years.
• Stamp duty reform timelines. ACT is mid-way through a 20-year stamp-duty-to-land-tax transition. Buyers in the ACT pay lower stamp duty than other states but pay higher annual land tax. Net cost over a 7-10 year hold can favour the ACT structure.

The right move at Step 1 is to check the current state-revenue-office page for each shortlisted state before locking in the decision. State-revenue rules change every state budget. What was true two years ago may not be true now.

Demographic and economic flows: where are people and jobs going

The longer-horizon signal at Step 1 is migration. Three flows matter:

• Interstate migration (net). Quarterly ABS data. Net inflows to QLD have been strongly positive since 2021. NSW has been net-outflow since 2022. VIC turned slightly net-positive in late 2024. Each state's net interstate flow drives demand for suburbs in its growth corridors over a 3-5 year horizon.
• International migration. Most international arrivals concentrate in NSW and VIC capital cities, with secondary inflow to QLD post-2023. International migration disproportionately drives unit demand in inner-ring suburbs.
• Job concentration and state economic mix. Mining-exposed states (WA, QLD) carry commodity-cycle risk. Service-economy states (NSW, VIC, ACT) carry interest-rate risk. SA and TAS are less exposed to either. Their cycles tend to lag the major capitals by 12-24 months.

These flows show up in the propautopilot 49-metric scorecard at the city and suburb level (Steps 2-3). At Step 1 the buyer wants the rolled-up state-level direction: which states are gaining people, which are gaining jobs, which are losing both.

Putting Step 1 together: a worked walkthrough

A buyer with a A$900k all-in budget post-stamp-duty, owner-occupier, no interstate moving constraint, runs Step 1 like this:

1. Cycle filter. Eliminate any state that's run > 50% over 36 months and > 80% over 10 years (mean-reversion zone, low forward-growth confidence). 2. Policy filter. Run the per-state stamp-duty calculator at A$900k for the buyer's category (owner-occupier first home buyer / standard / investor / foreign). Eliminate states where the all-in cost pushes outside the budget. 3. Flow filter. Of the remaining states, prefer the ones where net interstate plus international migration is positive for at least 4 of the last 8 quarters (sustained signal, not a single-quarter spike). 4. Tax-position filter. For investors holding for 10+ years, run the state-by-state land-tax differential at the buyer's intended portfolio size. Eliminate states where the land-tax position is materially worse than alternatives.

What's left is usually 2-3 states. The buyer takes those into Chapter 4 (Step 2 City) and the suburb explorer.

Common mistakes at Step 1

• Hometown bias. Buying in your own state because it's familiar, even when the macro filter points elsewhere. Familiarity isn't a signal. It's an anchor.
• Reading 12-month growth in isolation. A state with 20% growth in 12 months and 70% growth over 36 months is in mean-reversion territory, not in a "hot market." The 36-month and 10-year reads are the cycle-position signal. The 12-month is noise.
• Skipping the policy check. State-revenue rules change yearly. The buyer who runs Step 1 once and locks the answer for 18 months can find their stamp-duty position has shifted A$10-20k by the time they sign a contract.
• Ignoring the tax-position differential. A 2% better gross yield in one state can be entirely consumed by a worse land-tax position over the hold horizon. Step 1 is also a tax-position decision, not just a price-cycle decision.
• Treating mining-exposed states as too volatile to consider. Commodity-cycle exposure cuts both ways. The 2020-2022 boom in WA and QLD regional mining centres was sharper than the major capital cycle. Different risk, not bigger.

Now do this on your shortlist: open the explorer

The propautopilot suburb explorer at /explore aggregates state-level reads on cycle position, demand-supply pressure, and recent transaction trends. Use it to validate the state shortlist coming out of this chapter before moving to Chapter 4.