Worrying trend emerges amid cost-of-living crisis and it could have drastic consequences for Australia's future

Australia is in the grips of a 'baby recession' brought on by cost-of-living pressures and economic uncertainty, with the drop in births the most pronounced since the 1970s.

The number of births in Australia in 2023 dropped to 289,100 - that is the lowest since 2006 and the sharpest rate of decline in half a century, analysis from KPMG Australia showed.

The brief pandemic baby boom is over, with 26,000 fewer births last year compared to the cabin-fever spike in 2021 when people were housebound; a 4.6 per cent year-on-year decline.

KPMG urban economist Terry Rawnsley said economic uncertainty after the height of the lockdowns, and then the cost-of-living crisis meant many families had delayed or abandoned baby plans.

'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,' he said.

Fertility rates were lowest in city centres and inner suburbs while the highest number of births in capital cities were often in migrant-dominated greenfields areas, the analysis showed.

Sydney births fell 8.6 per cent from 2019 and Melbourne's dropped by 7.3 per cent.

There was a six per cent decline in Perth, 4.3 per cent in Brisbane, 0.8 per cent in Adelaide an overall drop of 3.6 per cent in the Northern Territory.

However, there was no change in Canberra and Tasmania experienced a 2.1 per cent bump compared to 2019.

'Young families are being pushed to the edges of the city where there is cheaper housing that can accommodate their children,' Mr Rawnsley said.

The overall fertility rate has dropped in recent decades, falling from two babies per woman in 2008 to 1.6 in 2023.

Major regional hubs including Newcastle and Wollongong in NSW had a similar number in births in 2023 compared to 2019, which Mr Rawnsley said reflected many younger couple leaving Sydney in search of more affordable homes.

Geelong in Victoria's southwest was a similar example as the growth in younger homebuyers produced an 11 per cent jump in births over that period, but a drop of more than six per cent drop compared to 2022.