Cost-of-living pressure cools fire in bedroom

Sydney is leading the nation’s baby drought as cost-of-living pressure and out-of-reach house prices dampen the desire of young couples to start or expand their families.

Australian couples are delaying having children or ditching the idea altogether, with cost of living and house prices to blame.

Sydney is leading the nation’s baby drought as cost-of-living pressure and out-of-reach house prices dampen the desire of young couples to start or expand their families.

Not since the stagflation-hit 1970s has Australia experienced as sharp a drop in fertility as it has in recent years, an analysis by KPMG Australia reveals.

Birthrates in Melbourne and Perth are also plummeting, with only Tasmania and Canberra bucking the trend.

And the post-Covid trend of young people moving to the regions to start a family appears to have stalled, the crunching of Australian Bureau of Statistics data finds.

Since the post-Covid lockdown baby spike in 2021 – when 315,200 babies were born – the national birthrate has nosedived, with 289,100 babies born last calendar year, the lowest annual number since 2006.

KPMG urban economist Terry Rawnsley said the blame for the “baby recession” fell fairly and squarely on cost-of-living ­worries and housing affordability.

And policies attempting to bolster the national birthrate, such as more flexible parental leave arrangements and childcare subsidies, have not changed the trajectory, he said.

“We haven’t seen such a sharp drop in births in Australia since the period of economic stagflation in the 1970s, which coincided with the initial widespread adoption of the contraceptive pill,” Mr Rawnsley said.

He noted Covid had played a significant role in the volatility of Australia’s recent birthrate, which has been on a broader long-term downward trend from 2.0 babies per woman in 2008 to 1.6 in 2023.

“Following the uncertainty of pandemic lockdowns, people who had held off having children decided to start families,” Mr Rawnsley said.

“The record-low unemployment rate and the stimulus money that flowed into the economy had provided encouragement for people to start having children again.”

But that optimism was now over, and reality was biting for young Australian couples.

“With the current rise in living expenses applying pressure on household finances, many Australians have decided to delay ­starting or expanding their families,” Mr Rawnsley said.

Since 2019 Sydney births have declined by more than 60,000, or 8.6 per cent.

Melbourne is also down by 7.3 per cent over the same four years, with Perth down 6 per cent and Brisbane 4.3 per cent.

Canberra was the only capital city to see no drop in births since 2019, holding steady at 5530 in both 2019 and 2023.

Mr Rawnsley said birthrates in the regions had experienced an immediate post-Covid boom as young people made sea and tree changes during the pandemic, but that had now “run out of steam”.

Overall, there was a small decline in the birthrate since 2019 in regional NSW and Victoria, with a larger fall in regional WA.

There were significant economic and social consequences associated with a falling birthrate, Mr Rawnsley said.

“Housing affordability has a big impact on fertility,” he said.

“If a young couple can’t afford a two-bedroom apartment that limits the number of children they will have.

“Migration is another area. We have been feeling the consequences of having a fertility rate well below 2.0 for the last 15-20 years, and been leaning heavily on international migration to supplement the workforce.

“That scenario is going to continue for the next two decades as the current crop of babies become the next generation of workers.”