The City of Melbourne estimates that the central city will need 21,600 additional dwellings by 2028.
Only 8,900 new apartments are expected to be delivered over that period. The gap between those two numbers works out to a 60 percent shortfall, and tenants are already paying for it.
By late 2024, the median weekly rent inside the CBD core had reached $750, up from $690 twelve months earlier. That is a 9 percent annual increase, recorded while vacancy averaged just 2.4 percent. Rents at the center of Melbourne now sit at record levels.
The shortfall figure comes from the “Melbourne CBD Market Outlook 2025,” a report that Urbis prepared for Far East Consortium, one of Australia’s most respected Melbourne property developers. The report examines how the city’s property market is shifting, what motivates buyers, and where the broader economy may be headed in 2025 and beyond. The author of the source material says he has worked in Australia’s property landscape for more than ten years. Over that span, he says, market cycles have come and gone, yet the inner core of Victoria’s capital has performed consistently well. He points to three foundations for long-term wealth creation: population growth, major infrastructure projects, and strong rental demand.
Start with supply. Prime land parcels inside the CBD grid are also running short, which limits how much new housing can be built. The source says existing stock is therefore positioned for significant capital appreciation. The Melbourne CBD Market Outlook 2025 notes that tight limits on new supply should push capital values higher as buyers compete harder. Given that deficit, the source argues, Melbourne apartments offer potential for faster capital growth and strong rental returns.
Demand is the other side of the equation. The report says Melbourne is on track to overtake Sydney as Australia’s largest city by 2032, with a projected population of 7.45 million by 2040. International Immigration has driven much of the steady growth of the past decade. In 2024 alone, 446,000 new overseas arrivals came to Melbourne, a continuous flow of new housing demand that bears directly on CBD real estate.
Pricing widens that demand further. In 2024, the median CBD apartment cost roughly 56 percent less than a detached house in the suburbs. That makes high-density housing a more accessible entry point for experienced buyers and first-time investors alike. On the income side, newly built CBD apartments have consistently delivered average gross rental yields of 4.8 percent. The source describes that return as a defensive quality in an inflationary portfolio.
Public spending on infrastructure adds another layer. A series of large projects is reshaping connectivity and lifting property values along key corridors.
The Melbourne Greenline, due in 2025, is a $224 million initiative. It will convert public spaces along the Yarra River into a 4 kilometer linear park, with new recreational and commercial opportunities. Also due in 2025, the West Gate Tunnel Project gives drivers an Important alternative to the West Gate Bridge. It eases congestion and smooths freight and passenger traffic between Melbourne’s western precincts and the CBD.
Planned for 2028, the North East Link is Victoria’s largest road project. It connects major arterial routes across the city’s north and east, shortening travel times and supporting decentralized urban growth. The Queen Victoria Market Renewal, set for 2029, is a $268 million revitalization of the historic marketplace. It adds public plazas, dining districts, and community hubs for residents and tourists.
Furthest out is the Suburban Rail Loop, scheduled for 2035. This multi-billion-dollar transit project links middle-ring suburbs, and it is expected to cut commute times and raise housing demand near hubs such as Clayton and Sunshine. Together, these projects anchor Victoria’s $107 billion infrastructure pipeline. The source says that pipeline strengthens Melbourne’s global competitiveness and supports property value growth for CBD apartments.
The national economy provides steady ground beneath all of this. Australia’s unemployment rate is near 4.0 percent, well below the 10-year historical average of 5.3 percent. Consumer sentiment has rebounded noticeably: the ANZ-Roy Morgan Index climbed 12 points year-on-year to 86.4 as inflation cooled to 2.8 percent. Major financial institutions expect the Reserve Bank of Australia to cut interest rates, bringing the cash rate down toward a range of 3.35 percent to 3.85 percent. Borrowing costs would ease as a result, and the source expects that cycle to release pent-up buyer demand and speed up market activity across Victoria.
From these threads, the source draws its conclusion. Rapid population growth, heavy infrastructure spending, and strong rental performance combine, it says, into an elite investment proposition for the Melbourne CBD. Future high-density development inside the central grid is fundamentally scarce, it argues, so well-located residential assets are in a unique position to outperform over the long term. It adds that buying property takes strategic insight, and that choosing the right asset class and location is paramount. Its recommendation is to consult a qualified property strategist or financial advisor about Melbourne CBD investment opportunities.
Taken together, the figures in the report point the same way: a 60 percent apartment shortfall, record rents, a growing population, and a $107 billion infrastructure pipeline. Whether new supply can ever catch up with that demand is the open question for Melbourne’s city center in the years ahead.
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