Why Sydney will keep its place as Australia’s biggest city

The nation’s population forecasters have peered into the future and concluded Greater Sydney will maintain its ranking as Australia’s biggest city for at least another decade.

In late 2020 the federal government’s Centre for Population predicted Greater Melbourne would grab the mantle as most populated city in 2026-27. But a review of overseas migration flows has changed that.

Sydney’s population will reach 6.5 million by 2035.Credit: Wolter Peeters

“Having reassessed state-level overseas migration patterns, the centre no longer projects Greater Melbourne’s population to overtake Greater Sydney’s by 2034–35,” the centre’s latest population statement said.

At the turn of the 21st century, Greater Sydney’s population was 17 per cent larger than Greater Melbourne’s, but the gap has been steadily narrowing amid strong population growth in the Victorian capital.

The centre says Greater Sydney’s current headcount is 5.58 million, about 4 per cent more than Greater Melbourne’s 5.36 million. It projects Greater Sydney’s population to reach 6.47 million in 2034-35, still marginally higher than Greater Melbourne’s at 6.43 million.

However, comparing city populations does depend on where the boundaries are drawn. Another method used by the Australian Bureau of Statistics to calculate urban populations – called the Significant Urban Area classification – shows Melbourne quietly overtook Sydney back in 2018 thanks in part to a boundary change.

The SUA classification measures only contiguous urban centres and does not include the Central Coast as part of Sydney. On that measure Melbourne had 5.1 million people, a little more than Sydney’s 5.04 million in mid-2023, the latest figures (for 2022-23) show.

Sydney versus the rest of NSW

The centre says NSW will gain 1.1 million people over the next decade, lifting the state’s population to 9.6 million by 2035. Net overseas migration will be the largest contributor to population growth.

Because a high proportion of overseas migrants settle in Sydney, its headcount will grow faster than the rest of NSW. As a result, the city’s share of the state population is forecast to rise from 65.7 per cent to 67.2 per cent by 2034-35.

Sydney currently accounts for 20.5 per cent of the national population and that proportion will also creep higher over the coming decade.

Regional NSW is forecast to be home to 3.15 million people by 2034-35, about 230,000 more than now.

Baby slump

The number of births per year in Australia peaked in 2018 at around 315,000 but has declined steadily since. The centre predicts 288,000 babies will be born this financial year, a similar number to 2007, when the national population was about one-fifth smaller.

The national fertility rate – the expected number of births per woman – is forecast to slump to an all-time low of 1.45 in 2024-25, way down on the rate of 1.65 predicted only a year earlier.

The fertility rate has fallen by a third since 2008 and the decline has accelerated since 2021.

“Recovery from the current low fertility rate is expected to take time,” the centre’s 2024 population statement, released in late December, said. It predicts the rate will settle at 1.62 early next decade.

Nick Parr, honorary professor of demography at Macquarie University, said a lower birth rate among women born overseas had contributed to the fertility rate slump.

“One factor has been the large inflow of overseas students and others on temporary visas,” he said. “Many of those on temporary visas are counted as part of the population, but their effect on the total number of births is negligible.”

Age disparities

The age gap between city and country is predicted to widen markedly over the coming decade.

Sydney’s median age (36.6 years) is already 5.8 years younger than the rest of NSW (42.6 years) but that difference is forecast to grow to 7.4 years by 2024-35.

Parr said the settlement patterns of overseas migrants were contributing to regional age disparities.

“One factor contributing to the relative youthfulness of Sydney’s population is the large flow of international migrants into the city, including overseas students and working holidaymakers,” he said.

Overseas migrants who have arrived recently tend to be younger on average than the existing population.

Tasmania’s median age, already the highest among the states at 42.2 years, will rise another 4.1 years by 2034-35. That compares with an increase of only 1.4 years in NSW over that period.

The median age in regional South Australia is forecast to reach 49.8 years by 2034-35, more than 12 years older than in Sydney by that year (37.6 years).

The centre warned “ageing will continue to present a demographic challenge”, with the national median age forecast to reach 40 years in 2034-35, up from 36.1 years 20 years ago.

Population growth from natural increase (births minus deaths) is forecast to decline in every state; deaths already outnumber births in regional South Australia (outside Adelaide) and regional Tasmania (outside Hobart).

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