New data from the Australian Bureau of Statistics shows a 2.6 per cent increase in births in 2025, lifting the fertility rate to 1.497. The baby bounce, driven by women in regional Australia, could come to an end: inflation has climbed to 4.3 per cent and the Reserve Bank lifted rates five times this year, while economist Terry Rawnsley said rising cost-of-living pressures would likely put downward pressure on birth numbers.
The national fertility rate lifted to 1.497 after hitting a record low in 2024, but remains well below the replacement level of 2.1. It is the third consecutive year the rate has been below 1.5.
The gains were concentrated in regional areas. In regional NSW births jumped 8 per cent and the fertility rate reached 1.87; regional Victoria's rate was 1.91. Councils such as Swan Hill, Southern Grampians, Cowra and Dubbo held rates above replacement level. In contrast, fertility rates fell in every capital city except Hobart, with the City of Melbourne at 0.5 and the City of Sydney at 0.66.
KPMG urban economist Terry Rawnsley attributed the bounce to improvements in the economic circumstances of families in 2023–24. “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. But he said: “Crystal balling for the next year’s numbers, we’ll probably see another dip as people feel squeezed by cost of living.”
The article notes that inflation has climbed to 4.3 per cent, partly due to high oil prices, and the Reserve Bank has raised rates five times this year. On a $600,000 mortgage, the hikes add about $500 to monthly repayments. Rawnsley said the national fertility rate had hovered near 1.5 for three years and had “seemingly found a bit of a floor”, but there was “no big policy lever or change pointing to a turning around”.
Opposition Leader Angus Taylor linked family formation to broader economic confidence. “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 also show fertility among young women (teens and 20–24) continues to fall, while the lift in 2025 was driven by those aged 25–39. Twin births totalled 4,148 and triplets or more 46.
The fertility slump is not unique to Australia; the article notes many nations in Europe and parts of Asia have had steeper declines, triggering warnings of a “demographic winter” in some.
The front page in your inbox each weekday morning: the lead, the picks, and why each one earned its place.
Fertility rate by area, 2025 (births per woman)
births per woman
Source: Australian Bureau of Statistics
§
Analysis
Why This Matters
Australia's below-replacement fertility rate means an ageing population unless migration fills the gap.
The brief bounce shows family decisions are sensitive to cost of living and interest rates, giving economic policy demographic stakes.
A renewed decline would increase pressure on the government to address housing and affordability ahead of the next election.
Background
Australia's fertility rate has been below replacement level since the 1970s and fell below 1.7 after the pandemic. The 2025 uptick was a surprise given long-term trends, but economists now expect it to be temporary as inflation and rate rises squeeze household budgets.
Key Perspectives
KPMG urban economist Terry Rawnsley: The baby bounce was driven by a temporary easing of cost-of-living pressures and softer interest rates in 2023–24, but rising inflation and Reserve Bank rate hikes this year will likely cause a new decline. He sees no visible policy lever to lift the rate back towards pre-COVID levels.
Opposition Leader Angus Taylor: Family formation requires economic hope: young Australians need to believe the economy offers them opportunities to start a family.
What to Watch
Next year's ABS births data to see if the expected dip materialises.
Reserve Bank interest rate decisions and any government cost-of-living or housing measures.
Political debate over family policy ahead of the 2027 federal election.
12 claims in this story checked against 1 source: 11 supported.
Show each claim
Partly supportedRawnsley said the fertility rate had “seemingly found a bit of a floor”.The Age - Latest News: ““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,””
SupportedRawnsley said an improvement in cost-of-living pressures and softening interest rates gave families confidence to have children, contributing to the 2025 baby bounce.The Age - Latest News: ““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,””
SupportedRawnsley said another dip in birth numbers was likely as people felt squeezed by cost of living.The Age - Latest News: ““Crystal balling for the next year’s numbers, we’ll probably see another dip as people feel squeezed by cost of living,””
SupportedAngus Taylor said young Australians need hope and belief in economic opportunities to want a family.The Age - Latest News: ““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,””
SupportedThe fertility rate edged up in 2025, while rate rises could threaten the baby bounce.The Age - Latest News: “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”
SupportedRegional areas drove the gains in births and fertility.The Age - Latest News: “a turnaround in Australia’s fertility rate that is being driven by women in regional parts of the country.”
SupportedCost-of-living pressures eased before the 2025 baby bounce.The Age - Latest News: “There was a bit of an improvement in cost of living pressures at the back end of 2023 and in 2024”
SupportedBirths rose 2.6 per cent in 2025 and the fertility rate lifted to 1.497.The Age - Latest News: “there were 299,903 births registered in 2025, a 2.6 per cent lift on the previous year”
SupportedInflation climbed to 4.3 per cent and the Reserve Bank lifted official rates five times that year.The Age - Latest News: “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.”
SupportedBirths in regional NSW jumped 8 per cent and its fertility rate was 1.87; regional Victoria’s rate was 1.91.The Age - Latest News: “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.”
SupportedFertility rates fell in every capital city except Hobart; the City of Melbourne’s rate was 0.5 and the City of Sydney’s was 0.66.The Age - Latest News: “The fertility rate fell in every capital city bar Hobart”
SupportedOn a $600,000 mortgage, the rate rises would add about $500 to monthly repayments.The Age - Latest News: “On a $600,000 mortgage, the rate rises will add about $500 to monthly repayments”