Fertility rates and apartment living – the ramifications for Australia and beyond

Australia is experiencing historically low fertility rates, with the Total Fertility Rate (TFR) dropping to 1.5 babies per woman in 2023 - a record low.

While various factors contribute to this decline, the relationship between housing patterns - particularly the prevalence of apartment living - and fertility rates warrants closer examination.

Fertility and housing in Australia

Areas with a higher concentration of apartment dwellings, typically inner-city locales, tend to have significantly lower birth rates.

Conversely, outer suburbs and regional areas, where detached houses are the norm, exhibit higher fertility rates.

This spatial disparity suggests that housing type and availability may influence family planning decisions.

Major Australian cities generally have lower fertility rates than regional areas, which tend to be closer to the replacement level.

The replacement level TFR is approximately 2.1 births per woman in developed countries, necessary for a population to replace itself without considering migration.

Australia's TFR has been below this replacement level since 1976, raising concerns about the long-term sustainability of the population and economy.

The role of housing affordability and type

Falling housing affordability is often cited as a factor influencing declining fertility rates.

However, the type of housing - specifically, the prevalence of apartments versus detached houses - also plays a critical role.

Urban cores with many apartments are less "family-friendly" in terms of space and affordability, whereas suburbs and country towns offer more room for larger families.

Studies suggest that it isn't just apartments that impact fertility rates but also the size of these units.

One- and two-bedroom apartments have the most significant negative effect on fertility rates.

In contrast, spacious apartments (three or more bedrooms) show little difference in fertility rates compared to similar-sized detached houses and other attached housing products like townhouses.

Cost implications

The cost of delivering new apartments has escalated, making them less affordable for families.

For example, in Sydney, it costs approximately $905,000 to deliver a new mid-rise apartment of 90 square meters with one parking space.

In contrast, a new detached house on a greenfield subdivision costs around $825,000, offering about 250 square meters, three to four bedrooms, and two off-street parking spaces.

This disparity highlights the economic challenges families face when considering apartment living.

Global trends

Australia's pattern is not unique; globally, many places with the lowest fertility rates have a high prevalence of apartment or high-density housing.

For instance, Spain has one of the highest percentages of households in apartments (roughly 70%) and a very low TFR (about 1.2).

In contrast, countries with more suburban layouts or lower overall density, such as the United States, tend to have moderately higher fertility rates, despite still being below replacement levels.

Urban centres dominated by vertical apartment living often experience acute "baby busts."

While correlation does not automatically imply causation, a growing body of research suggests that dense housing environments contribute to lower fertility.

Practical challenges of raising children in small, high-density dwellings—limited space, lack of private yard/play areas, noise, and privacy concerns—deter many potential parents.

Conclusion

Both Australian data and international comparisons paint a consistent picture: fertility rates tend to be inversely related to housing density and the prevalence of apartment living.

Inner cities with numerous apartment towers are recording exceptionally low birth rates, a trend mirrored in global cities from East Asia to parts of Europe.

Conversely, areas dominated by traditional houses with more space per family show relatively higher fertility.

This suggests that housing policy and urban planning - not just economic factors - are intertwined with demographic outcomes.

Regions aiming to support family formation may need to consider how the built environment, specifically the availability of spacious, family-suitable homes versus small apartments, can either encourage or discourage population growth.

About Michael Matusik Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive