Australia experienced record growth in population during 2022-23, with nearly half a million people added largely from net international migration. But this growth has not been funnelled fully into the private housing market, with 20% of new arrivals into the country taking up existing capacity in ‘non private dwellings’.
Overall growth was driven by Australia's net international migration, which reached 375,000 thanks to the return of international students and working holidaymakers. This is more than 50% higher than the year before the pandemic. While the natural population increase (births less deaths) decreased to the lowest level in 20 years.
High international migration was largely possible due to spare capacity in ‘non-private dwellings’, such as student accommodation, and worker housing, which saw a record population increase of 100,000 in 2022-23. The number of people living in ‘non-private dwellings’ has returned to 2018-19 levels of around 864,000 people.
In contrast, the population in traditional housing (e.g. houses, townhouse and apartments) increased by 393,000. This is only about 5% higher than the pre-COVID trend, further highlighting that rapid population growth during 2022-23 was heavily influenced by ‘non-private dwellings’.
KPMG's urban economist Terry Rawnsley explains that the spare capacity in ‘non-private dwellings’, particularly empty student accommodation, was pivotal to achieving this record level of population growth.
“While we have seen strong net international migration, the notion that it is all being accommodated in the private housing market is a bit of a misconception”.
Mr Rawnsley added, “it is true that student accommodation has played a major role in the growth of 'non-private dwellings', but we have also observed a rebound in the trend of people shifting into aged care homes which was disrupted during the COVID pandemic.”
“The increases in international student and aged care populations are largely a release of bottle necks caused by COVID. We are seeing many people moving into existing ‘non-private dwellings’ that had been underutilised during the pandemic.”
“Population growth in regional Australia’s ‘non-private dwellings’ was influenced by workers accommodation across the tourism, mining and horticultural sectors.”
More broadly, population growth primarily has been focused on major capital cities with 45% occurring in Sydney and Melbourne, while Brisbane and Perth accounted for a further 25%.
Perth had the highest annual growth rate of 2.7%, follow by Brisbane (2.5%), Melbourne (2.2%) and Sydney (2.0%). The rest of Australia saw annual population growth of 1.3%, which is the highest since 2017-18, highlighting the ongoing strength of the smaller capital cities and regional Australia.
Annual population growth, June 2023
| Area |
Estimated residet population (Million) | Annual growth (000) | Annual growth |
| Sydney | 5.4 | 108 | 2.0% |
| Melbourne | 5.1 | 111 | 2.2% |
| Brisbane | 2.7 | 65 | 2.5% |
| Adelaide | 1.4 | 22 | 1.5% |
| Perth | 2.3 | 61 | 2.7% |
| Rest of Australia | 9.5 | 123 | 1.3% |
| Australia | 26.5 | 490 | 1.9% |
Note: Total may not sum due to rounding
Population growth in the next financial year is expected to be much lower, in the order 300,000 to 350,000 people.
Given the current housing crisis, the provision of affordable homes remains a challenge for the nation.
Mr Rawnsley explains, “While demand for workers remains solid, the lack of housing will be a constraint to attracting key workers into Australia”.
For further information
Hayden Jewell
Corporate Communications
+61 423 868 454
hjewell@kpmg.com.au