Updated ,first published
High inflation and the Reserve Bank’s steep interest rate hikes could halt a small baby bounce with new figures showing a turnaround in Australia’s fertility rate that is being driven by women in regional parts of the country.
Figures from the Australian Bureau of Statistics, released on Friday, showed there were 299,903 births registered in 2025, a 2.6 per cent lift on the previous year and the biggest one-year increase since the post-COVID baby boom.
The increase arrested a long-term fall in the fertility rate which lifted marginally to 1.497 after dropping to a record low in 2024. A fertility rate of 2.1 is needed to naturally replace a nation’s population. It is the third consecutive year that it has been below 1.5.
The fertility rate fell in every capital city bar Hobart, with the biggest declines in Perth, Brisbane and Adelaide which all recorded sharp increases in home prices through 2025. The lowest capital city fertility rate is in Canberra at just 1.29.
Inner-city councils have the lowest, and fastest falling fertility rates, in the nation.
There were 61,902 births registered in Sydney last year which was 3780 more than in 2024. But that was not enough to lift the city’s fertility rate which dropped to an historic low of 1.38.
In Melbourne, the number of births fell by 1397 last year to 60,963, cutting the city’s fertility rate to 1.38.
The fertility rate in the City of Sydney was just 0.66. Other Sydney LGAs with very low fertility rates were Burwood (0.78), Willoughby (0.9) North Sydney (0.99).
In the City of Melbourne the fertility rate was just 0.5, the lowest of any local government area in the nation. Other Melbourne LGAs with very low fertility rates were Yarra (0.79), Port Phillip (0.81) and Stonnington (0.81).
But cheaper regional areas have much higher fertility rates with some areas actually going through a modest baby boom.
In regional NSW the number of births jumped by 8 per cent in 2025 and the fertility rate was a relatively healthy 1.87. The fertility rate in regional Victoria was 1.91.
Across regional Victoria, councils such as Swan Hill, Southern Grampians, Moyne and Moira have fertility rates above 2.1 which held steady or improved through 2025. In NSW, centres such as Cowra, Dubbo, Griffith and Yass also held fertility rates above replacement level.
KPMG urban economist Terry Rawnsley attributed Australia’s modest “baby bounce” in 2025 to improvements in the economic circumstances of families in that period.
“There was a bit of an improvement in cost of living pressures at the back end of 2023 and in 2024…and interest rates were kind of softening a bit at that time, so people had the confidence to press go on the family and we’ve seen that baby bounce come through in 2025,” he said.
“It shows a clear pattern between households’ disposable income and their propensity to have children.”
But that could come to an end.
Inflation has climbed to 4.3 per cent, in part due to high oil prices, prompting the Reserve Bank to lift official rates five times this year. On a $600,000 mortgage, the rate rises will add about $500 to monthly repayments while higher petrol prices are costing households around $100 a month more.
Rawnsley said rising cost of living pressures this year would likely put downward pressure on birth numbers.
“Crystal balling for the next year’s numbers, we’ll probably see another dip as people feel squeezed by cost of living,” he said.
Rawnsley said the national fertility rate has now hovered around the 1.5 mark for the past three years.
“The fertility rate seems to have found a bit of a floor in the past few years but there’s no clear factor that might drive it back-up again towards the levels around 1.7 we had pre-COVID,” he said. “There’s no big policy lever or change pointing to a turning around.”
The fertility slump is not unique to Australia – many nations in Europe and parts of Asia have had far steeper declines, triggering warnings of a “demographic winter” in some.
Opposition leader Angus Taylor, a father of four, said a lift in hope could help boost the chances of more children.
“For young Australians to want to have a family, they’ve got to have hope. They’ve got to believe that the economy gives them opportunities,” he said.
The ABS figures showed fertility among young women continues to fall, hitting record lows among teenagers and those aged between 20 and 24. The lift in 2025 fertility rates was driven by women aged between 25 and 39.
There were 4148 births of twins and 46 triplets or more, in line with previous years.
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