Also, the number of people with less severe mood disorders actually decreased over the period, says the study published in the Australian and New Zealand Journal of Psychiatry.
The findings are based on interviews with 3,000 South Australians done in 1998 and 2004.
"This seriously challenges the widely-held belief that more and more Australians are getting depression," said lead author Professor Graeme Hawthorne.
Prof Hawthorne said there was a widespread belief that rates were increasing because more people were coming forward to be diagnosed with the condition.
Several studies all over the world have also predicted that the global burden of depression will increase rapidly in the future.
"Well, we found a difference of 12 per cent for major depression but on the other hand. We did find a statistically significant difference for other depression - but it was a decline in depression," said Prof Hawthorne.
According to health experts depression might appear to be more prevalent because people are now coming forward to talk about suffering from the condition.