The Bureau of Meteorology said the storm blanketed roads with hail and brought an inch (2.5 centimeters) of rain in less than an hour.
"It was a very dangerous thunderstorm," said senior forecaster Richard Carlyon. "We don't often see storm cells like that."
The weather bureau forecast more storms through the evening. Emergency services could not keep up with reports of flooding and damage. In the city center, water was nearly knee deep in some streets and shopping centers were cleared out.
Train and tram services faced widespread delays as winds peaked at 62 miles (100 kilometers) per hour and deep puddles formed on the tracks. The Southern Cross train station was evacuated when winds tore a hole in its roof and rain poured down on train platforms.
Horse races were postponed after the track was covered with hail, and an Australian Football League game was canceled. That game had been moved to Melbourne at the last minute because of a week of rain in Queensland, where it had originally been scheduled.
In Queensland, rural communities that were inundated by floodwaters all week were bracing for more floods as their rivers rose. Queensland declared a state of emergency and made emergency funds available for the communities.
The Balonne River in St. George was expected to peak Saturday or Sunday at 44 feet (13.5 meters) - its highest level since records began in 1890.
Some people were staying at a makeshift evacuation center at the highest point in town.
Nationals party politician Barnaby Joyce said the community was prepared for the worst.
"We spent all day sandbagging and making sure we were prepared," said Joyce, who lives in St. George. "Nobody wants mud through their house, nobody wants to spend the next couple of months with the smell of rotting carpet and underlay around their house."
