Startling new figures have revealed fewer couples are having children, with Australia's birth rate set to drop to a historic low. 

The 2025 Population Statement expects the fertility rate to fall to 1.42 children per woman in 2025-26, before a slight recovery to 1.62 by 2031-32.

The figures are well below the replacement rate of 2.1 children per woman, a number that has not been reached in Australia for almost five decades. 

The Statement, released by the Centre for Population, reveals sweeping demographic change that will reshape Australia's economy, housing market and essential services over the next 40 years.

The country's population recently passed 27.5million, broadly in line with projections, but growth has cooled sharply as net overseas migration also dipped.

Fresh forecasts now predict the population will reach 31.5 million by 2035-36, about 150,000 fewer people than forecast in last year's Statement.

Centre for Population executive director Nick Latimer said the findings were essential for long-term national planning.

'Population changes over the next 40 years will be a major influence on Australia's economy and society,' he said.

Australia's population is expected to reach 31.5milion over the next decade by 2036 (stock image)

'The 2025 Population Statement provides an important evidence base on Australia's population today and what we expect will happen in the coming years.' 

For the first time, the Centre has released detailed analysis of fertility intentions and the growing role of medically assisted reproduction.

Mr Latimer said the trend had sharpened public debate.

'As fertility has declined around the world, it has been of growing interest in public policy debate,' he said.

'Fertility has also been a major focus for the Centre for Population this year.'

Migration remains volatile in the wake of Covid disruptions. 

Since projections were finalised, the Australian Bureau of Statistics has released updated data showing net overseas migration at 306,000 for 2024-25, just shy of the Statement's 310,000 estimate.

Mr Latimer warned uncertainty still looms.

Australia’s fertility rate is projected to fall to a new historic low of 1.42 births per woman (stock image)

'Forecasting net overseas migration has been challenging since the Covid pandemic,' he said.

'Although some aspects of migration have begun to return to more usual patterns, significant uncertainty remains.

'From 2025-26, net overseas migration is expected to be largely in line with the forecasts in the 2024 Population Statement.'

Treasurer Jim Chalmers said the government's migration overhaul aims to stabilise the system and align it with national priorities.

'The Albanese Government's Migration Strategy is helping to ensure our migration system works in the national interest,' he said.

He noted migration had fallen to 306,000 in 2024-25, close to half the post-Covid peak and lower than forecast due to fewer temporary arrivals.

On falling birth rates, Chalmers said the government would support families who want children.

'The Government is rolling out policies to ease pressure on families and make it easier for people to have children if they want to, including by taking the next steps in building a universal early education and care system and expanding and enhancing paid parental leave,' he said.

Jim Chalmers (pictured) said they would push for policies to reduce pressure on families

The report also shows Australia's population is ageing faster, though not as sharply as in the 1990s. 

By 2035-36, women are expected to live to 87.1 and men to 83.4, and the median age will rise 1.8 years to 40.2.

Chalmers said the shift carries major budget consequences.

'Population ageing is one of the five major forces reshaping Australia's economy,' he said.

'Population ageing will continue to drive demand for health care services and aged care, placing greater pressure on the budget.'

Population growth will vary dramatically between the states, with Western Australia leading at 1.8 per cent growth, while Tasmania is set for just 0.1 per cent.

Urbanisation is expected to accelerate, with 72 per cent of Australians living in capital cities by 2065-66, up from 68 per cent today. 

Sydney and Melbourne are projected to reach 8million residents by 2050, and surpassing that mark in the late 2050s, according to long-range forecasts.