A quick snapshot of the recent December 2025 National Population data release indicates that the moderation in Australia’s rate of population growth is starting to flatten out. Meanwhile, the level of interstate movers continues to reduce, creating challenges for the economy.
National trends
Australia’s population increased by 412,500 people over calendar 2025 to 27.801 million. After easing from a peak of 661,800 in the year to September 2023, annual population growth has stabilised at just over 400,000 per annum since the year to December quarter 2024, and is still above any pre-COVID peak twelve month period.
The December quarter itself recorded an increase of 78,600 people, down slightly on 87,400 quarterly growth reported twelve months earlier, suggesting that population growth continues to slow, albeit at a moderate pace.
Across the states and territories, only New South Wales experienced stronger population growth compared to the same quarter a year earlier, while growth in Victoria was marginally lower. Larger changes were felt across the other states, with notable decelerations are occurring in Queensland and Western Australia, although population growth overall in these states remains elevated.
Net overseas migration by state
Net overseas migration (NOM) remains the dominant driver of population growth, accounting for the majority of the increase over both the quarter and the year.
In the December quarter, NOM added 56,600 people (down from 64,300 in December quarter 2024), while on an annual basis it contributed 301,000 people, slightly below the calendar 2024 outcome of 330,500.
While overseas arrivals continue to slow overall, the uptick in departures in 2024 that followed the return of overseas arrivals has now stalled. Many of these recent arrivals on temporary visas are staying longer through graduate visas, or bridging visas, which typically apply pending an application for change of visa status. As a result, the rate of deceleration in NOM has stalled and continues to remain at long term highs.
As with the national total, all states recorded an easing in NOM compared to a year earlier, with the largest declines (in percentage terms) experienced by Northern Territory, South Australia and Queensland.
Overall, it appears that NOM will remain elevated relative to long-term averages, but below the exceptional highs seen in 2022–2023. This is highlighted by the Centre for Population’s NOM estimate of 295,000 for FY2026 in the May Federal Budget, only marginally below the calendar 2025 total of 301,000.
Net interstate migration
Queensland and Western Australia are the only states to record interstate migration inflows, but these continue to soften. Rising housing costs and reduced relative affordability in these states are likely reducing their attractiveness as destination markets.
Their loss has been the rest of the nation’s gain. New South Wales has seen a further year-on-year reduction in net outflows, while Victoria is drifting towards positive net interstate migration following sustained post-COVID losses, while South Australia’s and Tasmania’s net outflow has also improved. Net interstate migration outflows picked up slightly in Northern Territory and Australian Capital Territory also recorded an expanding net outflow.
With interstate migration steadily rebalancing across the states, it is becoming less of a driver of population redistribution. Moreover, interstate mobility continues to trend lower overall.
Interstate movers represented only 1.3% of the population in year to December 2025. This is well below the 2.0%–2.2% recorded up to 2000 and below the more recent 1.6%–1.8% range during the last surge over 2016–2019. Tight vacancy rates, low housing availability and difficult affordability appear to have created significant friction for movers. The lack of mobility makes it challenging for worker supply to meet pockets of worker demand with consequent implications for productivity.
Natural increase
Natural increase continues to provide a modest contribution to population growth.
In the December quarter 2025, natural increase was 22,000 people, reflecting 68,500 births and 46,500 deaths. On an annual basis, natural increase totalled 111,500, slightly below the year to September quarter outcome, suggesting that the natural increase is trending downwards after picking up through to the June quarter.
Births in the quarter were marginally up (+1%) compared to a year earlier, with Victoria, South Australia and Tasmania experiencing the largest increases. Structural factors, including affordability constraints and demographic ageing, are expected to continue to limit any sustained growth in births.
Deaths remain elevated relative to pre-pandemic norms This reflects Australia’s ageing population and is expected to continue to steadily climb. As a result, the natural increase remains well below pre-COVID levels and would be expected to continue to steadily decrease over time.
Implications
Annual population growth of around 412,500 people implies dwelling demand of around 190,000–200,000 dwellings per annum, depending on household formation assumptions.
Demand is therefore well above the 173,500 dwellings that were completed in the year to March 2026. Notably, some 197,500 dwellings also commenced construction, which is a good sign, but with much of the increment coming from high rise apartments, this won’t translate into completions until 2028 financial year.
As a result, the cumulative housing shortfall continues to build, maintaining pressure on rental markets and broader housing affordability. This in turn appears to have impacted population mobility, which can reduce productivity by limiting the efficient matching of workers to jobs, making it harder for businesses and growing regions to attract the labour they need while slowing structural adjustment across the economy. When housing affordability and rental shortages become barriers to relocation, labour becomes less responsive to economic opportunities, constraining business expansion, increasing skills shortages and ultimately reducing Australia's long-term productivity growth.
For further insight into the implications of population growth nationally and across the states, contact Angie Zigomanis at [email protected] or Rob Burgess at [email protected]
