Cost-of-living squeeze stalling baby boom, data reveals

Recent data from KPMG has revealed a “bounce back” in births across the country, yet the increase is still well-below pre-pandemic levels as Australians continue to grapple with the tough economic climate.

The big four accounting firm found that over the last year, the total number of births nationally reached 292,500 – a recovery of 2.6 per cent compared to the previous year.

However, this was noted to be a 3.8 per cent drop from 304,000 in 2019, before the pandemic significantly drove up birth rates.

Terry Rawnsley, KPMG urban economist, said the baby bounce back was largely felt outside the nation’s capital cities, with regional Australia having reached 94,900 births in the last year – a 3.9 per cent increase from 2023.

“Rising rents, mortgage payments and childcare costs in the metro areas are putting a handbrake on people’s plans to start or grow their family,” he said.

“Instead, regional communities are continuing to emerge as popular places to live, work and raise a family, with affordability now top of mind for many Australians.”

According to Rawnsley, the decline in birth rates could be primarily attributed to economic pressures which reflected changes in disposable income.

Despite the rate remaining subdued due to cost-of-living pressures, Rawnsley believes the growth in disposable household income per capita in 2024 suggested a cause for optimism that birth rates would recover further.

The “magic figure” cited by KPMG needed to sustain “our way of life” is 350,000, which is predicted to still be a while off.

“During the initial recovery from the lockdown period birth rates temporarily spiked due to low unemployment and substantial government stimulus. But the rising cost-of-living pressures in 2022 and 2023 triggered a significant ‘baby recession’, with births dropping by 5.1 per cent during that time,” Rawnsley said.

“While many Australians are still holding back due to cost-of-living pressures, those with a little more cash in the bank are now turning their attention to having a family again. The baby bounce back is absolutely on, with the birth rate set to reach 300,000 over the next year.”

Breaking down the analysis, KPMG noted the “baby bounce back” is led by west Sydney, southwestern Brisbane and Perth, however, Melbourne’s total fertility rate continues to decline.

In comparison to the capital cities, the data shows that regional areas overall have displayed more resilience compared to capital cities, with many having seen strong growth in birth rates compared to the previous year.

“The strong birth rates outside the cities are in part a consequence of the great migration we saw during the pandemic which encouraged many Australians to leave city lockdowns for a better lifestyle in the regions,” Rawnsley said.

“These regions are now feeling the long-term benefits of that migration as their relative affordability has allowed them to retain those people who have put down roots and are starting families.”