Priced out of parenthood: The link between home prices and Australia’s falling birth rate

Rising home prices, expensive mortgages and competitive rental markets are prompting younger Australians to rethink their baby plans.

Australian Bureau of Statistics (ABS) data forecasts an extra ten million people will be living in Australia by 2050, bringing the nation’s population to almost 38 million.

But rising living and property costs in the wake of Covid mean that number is unlikely to be propped up by births. Instead, the majority of that 10 million are expected to be migrants of workforce age.

A declining birth rate presents a genuine threat to long-term economic growth but with property prices jumping by up to $66,000 in just a year in some parts of the country, many people are losing the chance to set themselves up sufficiently for having children.

Research from KPMG shows Australia’s birth rate remains well below its pre-pandemic rate, despite a slight bounce back in the past year.

Australia saw 292,500 births in 2024 – a 2.6% uptake on 2023 numbers but far below the 304,000 births in 2019.

The number of children over a woman’s lifetime, known as the fertility rate, needs to sit at 2.1 children to sustain Australia’s population. In 2024, the nation’s rate sat at just 1.51 children.

The Covid and post-Covid high inflation environment in the years since means households are grappling with complex decisions around exactly how, when and where to spend hard-earned money.

Cost of living has always dictated how and when Australians choose to start or grow a family, with rising mortgage rates, high property prices, rental affordability and housing supply are central in this.

Home prices nationally are 5.3% more expensive than in mid-2024, when the median home price was $795,000. Back in July 2019, the nation’s median dwelling value was $524,744.

With economic pressures driving declining birth rates, it is expected to take a long time before Australia exceeds the 350,000 births a year figure needed to sustain its economy.

Regions and outer suburbs doing the heavy lifting

The baby bounce back Australia experienced last year was largely outside of capital cities.

In keeping with that, regional areas have seen significant population growth since Covid thanks in part to interstate migration spurred by a relatively more affordable lifestyle and home prices.

In regional Australia, there were 2.5% more births in 2024 than there were in 2019.

By contrast, the birth rate in Sydney – the nation’s most expensive capital city – was down 9.4% in the same period.

Brisbane and Adelaide saw drops of 5.4% and 4.1% respectively, while Perth is the only capital city where more children are being born now than in 2019.

Regional hotspots Geelong and Newcastle experienced record-high birth numbers last year, while numbers were also up on the Gold Coast, the Sunshine Coast, in Cairns, Townsville and Wollongong.

All of Australia’s largest regional areas had more births in 2024 than in 2023, with Geelong, Darwin and Newcastle recording the most highest increases.

While capital cities remain significantly more expensive than their regional counterparts, baby numbers are taking off in some capital city centres where affordable pockets can still be found.

In Sydney, the five suburbs with the most births in 2024 are all located in the more affordable western region of the city.

Demand in these areas in unlikely to slow, with increasing infrastructure and new homes investment proving attractive for young buyers.

In Melbourne, the total fertility rate dropped to 1.40 in the last year, representing the lowest rate among the major cities.

The figures correlated with Melbourne’s embattled property market, which continues to feel lasting negative effects from its extensive Covid lockdown.

Once firmly the country’s second most expensive capital, Melbourne has plunged to the third cheapest option after Darwin and Hobart.

With a median home price of $830,000 thanks to growth of 2.1% between July 2023 and July 2024, the city is finally starting to pick back up.

The western and northern growth corridors are seeing the biggest baby boom, according to KPMG, providing much-needed overall population growth to the state.

‘Greenfield suburbs’ – undeveloped locations outside of urban centres – have proven to be big hitters when it comes to births in 2024, driving home the idea that affordability and space are taking precedence over city proximity.

Brisbane recorded the highest fertility rate on the east coast last year, with 30,000 births in total.

This increase of 1.8% on 2023 figures accompanies south east Queensland’s growing popularity among young families.

The outer suburbs of Brisbane heading to popular and booming Gold Coast and Sunshine Coast regions have come out on top for birth rates.

Brisbane is the only east coast capital with a fertility rate above the national average, continuing to attract more young families from other parts of the country thanks to its hot affordable pockets.

KPMG defined south east Queensland’s ‘baby corridor’ area as westwards towards Ipswich and south towards Logan.

Liveability in these areas will need further infrastructure, new homes, amenities and transport in order to be sustainable.

Perth has experienced the highest rate of recovery of any capital, KPMG found, with approximately 27,000 births in 2004.

At the same time, Perth has seen some of the strongest median home price growth of any capital since Covid, having recently cemented itself as the third-priciest Aussie city.

While buyers can get better bang for their buck in other cities, Perth’s continuing affordability compared to Sydney and Brisbane has secured it as a key hotspot for future population growth.

With the nation still in need of higher birth rates, current migration assumptions are making it harder to map out how property prices could be affected by where people choose to have families.

While younger Australians previously followed a standard pattern of relocating to a city before moving to a regional area aged 45-55, younger buyers are now opting for deals in regional areas in order to balance costs.

Prices are on the up in regional areas but locations where homes remain affordable at any given time are most likely to see increased birth rates.

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