Why Young People Are Leaving These Once-Thriving Suburbs

Thousands of working families are leaving Sydney and Melbourne’s suburbs, causing significant population declines, new analysis from KPMG shows.

KPMG urban economist Terry Rawnsley has identified a number of “shrinking suburbs” where populations fell between 2019 and 2023 – in some cases by as much as 3.3 per cent.

Rawnsley’s analysis, based on data from the Australian Bureau of Statistics, found the exodus is largely being driven by people under the age of 65. The proportion of older residents is rising in many of these areas.

However, this trend is not the same across all Australian cities.

Meanwhile, inner-city suburbs in Perth and Brisbane saw an influx of residents aged between 20 and 64. This helped boost the overall population of these areas, with Brisbane’s north growing by 8.5 per cent and the Stirling area in Perth growing by 7.5 per cent.

Despite being areas with exceptional access to jobs and excellent local infrastructure, the suburbs of Melbourne and Sydney are seeing their populations decline as young people simply cannot afford to live there.

Terry Rawnsley, KPMG

Why are young Australians leaving Sydney and Melbourne?

The Latest found that in 2023-24, a household with an average income of $112,000 could afford only 14 per cent of homes sold in Australia, with the least affordable states being New South Wales, Victoria and Tasmania.

Rawnsley says the population decline also reflects a broader decline in birth rates over the past five years.

Houses by the water, residential buildings in the background.

New South Wales, Tasmania and Victoria have been named the least affordable states in Australia, according to the latest PropTrack Housing Affordability Report. Source: AAP / Mick Tsikas

The population shift comes as no surprise to Julie, a mother of two who moved her family from Sydney’s north shore to Brisbane in 2020.

The 42-year-old and her husband could only afford to buy an apartment in Sydney, which they were unhappy about because they wanted to expand their family.

“You can have two kids in your (two-bedroom apartment) and … go to the park. For many people, that’s perfectly fine and an acceptable way of life in many cities around the world,” Julie says.

“But we’re spoiled in Australia. We want the big dream, the Australian dream. You want a house and you want land.”

Instead of buying a condo in Sydney seven years ago, they bought a three-bedroom, clapboard house in Camp Hill — 6km from Brisbane’s central business district — with the idea of living there one day.

The pandemic helped them make this change.

After living on their property for two years, they built a modern five-bedroom home with a swimming pool on the plot.

“We have the lifestyle we always dreamed of in Sydney,” says Julie.

“We have a house, we’re close to the city, we’re in a really good neighborhood. It’s worked for us.”

The exodus of young people may have consequences

Rawnsley says housing affordability is changing the urban fabric of Sydney and Melbourne at an extraordinary pace.

“Even some millennials cannot afford to rent or buy an apartment in these locations,” he adds.

In contrast, older people who opt for smaller apartments appear to be moving to areas that typically offer easy access to transportation and services, such as hospitals and other medical facilities.

Rawnsley says the exodus of young people could make it harder for businesses such as cafes and restaurants to hire staff.

He points out that young people have also helped to revitalise areas such as Marrickville in Sydney, Brunswick in Melbourne and Fortitude Valley in Brisbane, making them attractive places to live.

“If we start losing these young people, some of that vitality will shift.”

Young families now appear to be contributing to suburban population growth, which Rawnsley said could put a strain on transport, schools and other infrastructure.

Sydneysiders being driven further west

While Sydney’s overall population continues to grow, the number of people living in the city’s eastern suburbs, inner west and lower north shore has fallen by between 1.3 and 2.7 per cent since 2019.

The eastern suburbs, which boast desirable coastal areas like Bondi Beach, saw the biggest declines in population, with more than 6,000 people leaving the city between 2019 and 2023, almost all of whom were under the age of 65. That’s more than 2.4 per cent of the population.

Across the CBD, Leichhardt’s population fell by 2.7 per cent, while parts of Sydney’s trendy west, including Marrickville, Sydenham and Petersham – previously considered more affordable for families – lost more than 1000 people (1.9 per cent of the population), all but 42 of whom were under the age of 65.

Table showing population growth and decline in Sydney's inner-city suburbs by age.

The number of working-age people and children has fallen in areas of Sydney within 10km of the central business district. Source: SBS News

The situation is different in the Blacktown (North) statistical area.

The area, 34km west of Sydney’s central business district, saw its largest influx of young people between 2019 and 2023, with an additional 46,329 people arriving. All but 3,506 of those were under the age of 65.

Other western areas that saw their population increase by more than 11,000 residents included Bringelly – Green Valley, Rouse Hill – McGraths Hill, Campbelltown, Liverpool and Penrith.

Overall, the proportion of people over 65 in Sydney rose to 15 per cent from 14 per cent in 2019.

Melbourne’s shrinking and expanding suburbs

Melbourne also saw its overall population grow – by 4 per cent – but some areas saw their population decline.

Stonnington (west) in Melbourne’s southeast, which includes the affluent suburbs of Toorak and South Yarra, lost 3.3 per cent of its population between 2019 and 2023. Almost all of those residents were under the age of 65.

Neighbouring Boroondara, also in Melbourne’s eastern suburbs, lost 2.9 per cent of its population. Over the same period, the number of people aged over 65 increased by 1378.

Table showing population growth and decline in inner-city areas by age.

Many Melbourne suburbs within 10km of the central business district have been hit by working families leaving. Source: SBS News

Western growth areas such as Wyndham and Melton – Bacchus Marsh gained almost 100,000 residents. Almost all of the growth in these two areas was driven by young people.

The population of Melton-Bacchus Marsh increased by 21 per cent.

Other areas that saw large increases included Casey (south), Cardinia and Tullamarine – Broadmeadows.

Brisbane’s boom is affecting many areas

Bucking trends in the south, young people have begun moving en masse to Brisbane’s inner-city suburbs, with population growth between 2019 and 2023 in areas including Newstead, Bowen Hills, Morningside, Seven Hills and Paddington.

The population of Brisbane’s inner city increased by 17.9 per cent, with the number of people of working age reaching 13,432.

Rawnsley believes this could make Brisbane more attractive to big businesses.

“National companies may look more closely at Brisbane and Perth as places to locate more of their operations because they see they have more employees in and around the CBD, meaning they are easily accessible to their business.”

The working-age population within 10km of Brisbane’s central business district has increased dramatically. Source: SBS News

Rawnsley says that despite population growth, Brisbane has continued to see a decline in the number of young children in prime residential areas, which could indicate that issues such as housing affordability and lower birth rates may still be at play.

The largest increase was recorded in Jimboomba, located almost 50km south of the central business district, which saw an increase of 25.9%.

Another undeveloped area, Browns Plains, also saw significant growth.

“Families are increasingly considering greenfield investments in Brisbane where land is more readily available,” Rawnsley says.

“However, these areas come with their own set of challenges, such as access to jobs, basic services and employment.”

Perth’s fastest growing suburbs

As with Brisbane, population numbers in key central Perth locations have increased, including suburbs such as Subiaco, Northbridge and Highgate.

Residents also began to flock to the neighbouring Stirling area, which includes coastal areas such as Scarborough.

In Perth the number of children and people of working age has increased, although the number of older people has also increased. Source: SBS News

However, it was the city’s green belt that saw the biggest percentage change: the population of Swan in the north-east, which includes Ellenbrook and Brabham, rose by 15 per cent (21,677 people).

Wanneroo, north of Perth’s central business district and home to the suburb of Yanchep, saw its population grow by 10 per cent to 20,857.

“As affordability drives the movement, Perth is emerging as a haven of economic activity and urban development,” Rawnsley says.

“Although the challenge now is to ensure that the additional housing supply helps to keep Perth an affordable place to live.”

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Why Young People Are Leaving These Once-Thriving Suburbs

Why are young Australians leaving Sydney and Melbourne?