Responding to the population dynamics driving Australian cities

Population dynamics in cities related to factors including economic opportunity, migration policy, changing demographic characteristics and patterns of household formation.

27 July 2020

Australia is a highly urbanised nation with around two-thirds of the population living in a city. Population growth is concentrated in Australia’s major capital cities, with growth rates of 1.8 per cent between 2018 and 2019 being significantly higher in capital cities than in the rest of the nation (which grew by 1.0 per cent on average and had some areas experiencing population decline in 2018). Facilitating population growth features strongly within metropolitan planning strategies and infrastructure reports. Planning for Australia’s future population outlines the Australian government’s policy framework on supporting continuous population growth to facilitate to the development of a strong economy and cohesive society backed up through attracting skilled migrants.

The Brief on ‘Population’ refers to the population dynamics in Australia’s major capital cities, smaller and regional cities, the settlement of migrants and demographic changes in ageing and household formation. These policies are predicated upon an assumption of population growth, which depends to a large extent on Australia’s migration policy settings; the effect of closing Australia’s borders in response to the COVID-19 pandemic is likely to be significant.

Population dynamics

Major capital cities

The three largest cities grew most between 2018 and 2019, with Melbourne’s estimated population reaching 5,078,193 in 2019 (a growth rate of 2.3%), Brisbane reached 2,514,184 (a growth rate of 2.1%) and Sydney reached 5,312,163 (a growth rate of 1.7%). Infrastructure Australia emphasises that population growth is an opportunity to enhance economic prosperity and liveability.

A current AHURI Inquiry is researching the key drivers of population growth and mobility in Australia; the effects of economic agglomeration on the productivity of cities; and urban governance frameworks that have been planning for, and responding to economic and population growth.

Regional and smaller cities

In contrast to fast growing major capital cities many smaller cities have lower population growth rates. While the population of Melbourne increased by 2.4 per cent in 2018, several urban areas, including Darwin, Geraldton and Rockhampton, experienced a decline in population. AHURI evidence has identified that the development of regional cities and their local economy is constrained by a lack of infrastructure and housing stock.

Urban population chang

Infrastructure Australia emphasises the role of governments to facilitate further population growth in regions to ensure on-going economic prosperity. Regional communities and economies should be supported by long-term planning and coordinating government and private sector investment, such as in transport and telecommunications infrastructure to increase connectivity and access to jobs and services.


In 2019, overseas migration contributed to 62.5 per cent of Australia’s population growth. Overseas migration to and from Australia in 2018-19 resulted in a net increase to Australia's population of 239,600 people. Major capital cities are the main place for migrants to settle. The Western Australian strategy Perth and Peel@3.5million, acknowledge the contribution of skilled migrants to cities’ prosperity and cultural diversity.

Overseas migration

However, the settlement of migrants features less extensively in urban policies but is rather addressed in more general population policies. ‘Planning for Australia’s future population’ highlights the role of permanent migrants in addressing skill shortages in the economy and offsetting the effects of an ageing population. The strategy seeks to manage population growth by redirecting migrants to settle in smaller cities and regions instead of major cities.

Demographic change: ageing and household formation

The demographic characteristics of Australia’s population are changing, based on a shifting composition of households and an ageing population. AHURI research shows that demographic changes in Australia, such as an accelerated ageing of the population and substantial decline in household formation rates and average household size, is impacting home ownership outcomes, in particular for younger age cohorts.

Metropolitan planning strategies focusing on urban consolidation and higher density residential developments are taking changing demographics into account. In connection to the built environment, city policies could address the provision of adequate housing, social infrastructure and urban amenity in accordance with changing household compositions and needs.

Policy implications

Population dynamics impact housing markets, liveability and infrastructure provision in Australian cities. There is a need for alignment across tiers of government and sectors in the planning and delivery of housing, infrastructure, services and employment opportunities in response to changing populations. Urban policies also need to respond to demographic changes, such as an ageing population and the shifting composition of households, and plan for more environmentally, economically and socially sustainable outcomes.

Policies for major capital cities have been responding to the implications for urban systems of extremely high levels of household growth, largely fuelled by immigration, although this has recently been disrupted by the COVID-19 pandemic. There is a need to focus also on creating sustained employment opportunities in smaller cities to attract and retain people, fostering liveability in these places, and improving connectivity through transport and digital infrastructure provision.

Future lines of inquiry

  • How will changes in immigration levels and programs impact cities, including labour and housing markets and urban development?
  • What are the long-term population trajectories for rural, regional and urban Australia, and how might a national framework be implemented?
  • How can Australian cities become more inclusive to provide access to amenities and services for a changing demographic, particularly elderly and children?
  • How can urban policies support population health?