Chart of the Month - April 2026

Sydney remains Australia's most economically important city, contributing significantly more to national GDP, however Melbourne's population is catching up. Ever since Melbourne was founded by Batman, Melbourne has been Sydney’s nemesis. The 1850s gold rush propelled Melbourne ahead of Sydney, but over the course of the 20th century, Sydney overtook Melbourne. However, Sydney is running out of room and without a fast train to create new distant feeder suburbs, Melbourne will overtake Sydney in terms of population (see chart below) and possibly in terms of importance.

Why will Melbourne’s population overtake Sydney’s?

Melbourne is expected to reach a population of 9.1 million and overtake Sydney’s population by 2065-66 according to the Centre for Population. Melbourne and Sydney currently have a population of 5.4 and 5.6 million, respectively.

Since 2002, Melbourne’s annual population growth rate has surpassed Sydney’s for every year except 2021. The 2021 result reflects Melbourne’s more draconian pandemic lockdown measures.

In 2024-25, Melbourne had the largest natural increase and increase from overseas migration of any of the Australian capital cities. Significantly, it also had a lower migration loss to other cities than Sydney (see chart below).

A key reason for Melbourne’s higher population growth is that Sydney is geographically constrained, and this is crimping its development. Sydney is surrounded by mountains and rivers on three sides and the ocean on the fourth (see image below).

A high-speed train to Newcastle in the north could unlock new feeder towns but the engineering costs are significant and countless proposals over forty years have withered away. The latest proposal has an estimated cost of AUD 55 billion but would deliver an estimated $250 billion to the national economy over 50 years. Prime Minister Anthony Albanese is keen, but the NSW State Premier is lukewarm. 

Source: Seeing the City, The Committee for Sydney, December 2018

Brisbane is Australia’s third-largest city by population and has been growing faster than Melbourne and Sydney since 2001. Its growing importance will be underlined by its hosting of the Olympics in 2032. However, at this stage, Brisbane’s population is still around half that of Melbourne’s and less than that of regional NSW (see chart below).

Reports from 2023 suggesting that Melbourne had already overtaken Sydney’s population were greatly exaggerated. It was based on a redrawing of the boundaries of urban Melbourne and did not consider the greater metropolitan area.

Which city is more important?

Both cities already punch above their weight globally and typically rank close to each other across a range of measures.

Melbourne (6th) and Sydney (7th) are both in Oxford Economics’ top 10 global cities. They rank 31st and 24th in Long’s Global Financial Centre Index. The University of Melbourne (19th) and The University of New South Wales (20th), and The University of Sydney (25th) are in the top 30 universities of the world according to the QS rankings. Melbourne and Sydney also rank 32nd and 25th in terms of startup ecosystems. They are also in the top 10 of the world’s most liveable cities according to the Economist, with Melbourne fourth and Sydney sixth.

Economically, Sydney is clearly more important, with a larger contribution to GDP (see chart below). Sydney is also Australia’s main financial centre. However, this could change as Melbourne’s population overtakes Sydney’s. Prior to the 1960s and 1970s, Melbourne was Australia’s main financial centre.

Source: Experimental Gross Regional Product estimates, Department of Infrastructure, Transport, Regional Development, Communications, and the Arts

Final thoughts

Melbourne’s and Sydney’s rivalry stretches over a century and cuts across economic, cultural, and sporting contexts. Sydney is currently ahead, but this looks to be changing. Regardless, Australia is blessed to have two such great global cities. Brisbane will soon stake a claim to join their ranks.