Melbourne is adding 327 people a day as it draws residents from around the globe and around the state with new figures revealing the city's population swelling and on track to overtake Sydney within a decade.

Australian Bureau of Statistics data showed the Greater Melbourne area added 119,421 residents through 2017-18, taking the city's total population to a record 5 million.

It's the fourth successive year in which Melbourne has added more than 100,000 residents although last year's result was slightly down on the 125,424 who swelled the city in 2016-17.

Melbourne reached 4.5 million residents in mid-2016 and has now added more than 460,000 people in three years. Over the same period, Sydney added 300,000 residents.

Based on current growth rates, Melbourne will overtake Sydney as the nation's most populous city in 2026. The last time Melbourne was larger than Sydney was early last century.

Of Melbourne's total population increase through the year, 65 per cent of it was due to overseas migration.

One of those to make the move to Melbourne is SriHarsha Malempati, 23, who arrived in the city in October last year.

Student SriHarsha Malempati who moved to Melbourne six months ago. Justin McManus

SriHarsha holds a bachelor's degree from his home city of Narasaraopet, but wanted to further his education in Melbourne, a city he says stood out when researching cities around the world.

Never having stepped foot in Melbourne before making the move, SriHarsha relied on friends who all spoke highly of their experiences in the city.

"To be frank, Melbourne is number one. It’s the most liveable city. I didn’t consider Sydney or any other place in Australia … Melbourne is just too good,” he said.

"I like the rules, everything is very functional."

The figures also point to problems in the Morrison government's plans to encourage migrants to areas outside Sydney and Melbourne.

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Just four migrants made their way to two Victorian councils, West Wimmera and Gannawarra through the entire year. The Melbourne council area was the new home for 8873 net overseas migrants.

Only the much larger Brisbane council area, which covers 1342 square kilometres compared to Melbourne's 37 square kilometres, had a larger increase in net overseas migrants.

Prime Minister Scott Morrison, announcing a range of road projects aimed at reducing congestion in suburban Sydney on Wednesday, said the government understood the importance of encouraging new overseas migrants into parts of the country outside of Sydney and Melbourne.

"We know that there's a lot of pressure on our cities and we are going to continue to ensure that there is a positive migration program to Australia, but we're going to ensure that the benefits of that are spread more broadly across the country," he said.

Next week's federal budget will confirm a cut in the official migrant intake to 160,000.

Of the 10 fastest growing parts of Australia, four were in Melbourne. They were led by the Rockbank-Mount Cottrell in the city's north-west where the population grew by 59 per cent to 6455 through the year.

While there was strong growth across most of Victoria, some parts of the state suffered de-population. Ten council areas led by Hindmarsh, centred on the north-western town of Nhill, saw a fall in the number of local residents.

Nationally, capital cities now account for 67.5 per cent of all residents, with Sydney still the largest with 5.2 million people.

The bureau of statistics' demography director, Beidar Cho, said the nation's capitals kept powering population growth.

"The number of people living in our capital cities increased by 307,800 people in 2017-18. This in on par with the average growth over the previous three years," he said.

Darwin's total population fell by 355 despite it being home to one of the fastest growing suburbs in the country while regional Western Australia shed 583 residents even as Perth's total resident count increased by more than 21,500.

CommSec chief economist Craig James said the figures showed the stark differences in population growth between the nation's capital cities and its regions.

"The latest regional population data highlights the need for re-balancing of both internal and overseas migration flows," he said.

"Population growth in major capital cities is soaring in relation to regional Australia. In fact population is going backwards in Darwin as well as in regional and rural Western Australia."