Smartphone sales in Australia fell 2 per cent year-on-year in the second half of 2016 to 4.1 million units, as rising penetration and higher prices curbed sales.

Sales during the half were impacted by a combination of factors, including the recall of the Samsung Galaxy Note 7, rising prices of premium handsets and a difficult retail environment, according to a study by research firm Telsyte.

The firm estimates 75 per cent of Australians use smartphones, with near full penetration in the 18 to 55 year-old age group.

For the full year the market grew less than 1 per cent.

Apple’s iPhone was the most popular brand sold in Australia, with an estimated 1.7 million units sold in H2 2016. Despite higher prices, iPhone repeat purchase intentions remained the highest in the industry at more than 80 per cent.

“A third of the iPhone installed base is on the iPhone 5S or earlier models, making them ripe for an upgrade,” said Telsyte senior analyst Alvin Lee.

Android remains the most popular operating system on smartphones in Australia (52 per cent of the installed base), with Samsung continuing its Android sales leadership followed by Huawei.

According to Telsyte’s research, the recall of Galaxy Note 7 negatively impacted Samsung’s brand for only a third of its smartphone users. Samsung repeat purchase intentions were about 60 per cent, similar to before the recall.

About 30 per cent of all online purchases of physical goods and services last year were made on smartphones and tablets, up from 22 per cent in 2015. Three-quarters of smartphone users streamed music, video or both to their device in 2016, as mobile data caps increased and more than half of all mobile phones were connected via 4G.

One in four smartphone users indicated they “feel addicted” to their device.