Melbourne’s central business district is staring at a shortfall.
The City of Melbourne projects a need for 21,600 additional dwellings by 2028, yet the apartment pipeline is expected to produce only 8,900 new units. That leaves supply 60% short of demand, and the gap forms the core case for treating CBD apartments as an investment with real potential for price growth and rental returns.
The numbers come from “Melbourne CBD Market Outlook 2025,” a report prepared by Urbis for Far East Consortium, one of Australia’s most respected Melbourne property developers. The developer commissioned the study to understand how the city’s property market operates, what drives buyer behavior, and where the economy is heading in 2025 and beyond. The analyst behind this review has spent ten years advising clients through Victoria’s shifting real estate cycles and says a better window for strategic acquisition has seldom opened. Melbourne CBD stays among Australia’s most attractive property markets, supported by a growing population, transformative infrastructure projects, and strong rental demand. Reading that landscape well demands a firm grasp of local market fundamentals.
Start with people. Melbourne is set to pass Sydney as Australia’s largest city by 2032, and its population is projected to hit 7.45 million by 2040. Immigration has powered steady growth over the past decade, and in 2024 alone the city received 446,000 new overseas arrivals, which added to housing demand. For anyone comparing real estate investment trusts with direct property purchases, the structural undersupply described above underpins long-term capital appreciation.
Entry cost is another draw. Apartments in the CBD sell for far less than detached houses, one of the benefits of buying an apartment instead of land. In 2024, the median apartment price in Melbourne CBD sat 56% below the median for a detached house, which puts ownership within reach of more buyers.
Rental figures point the same way. The median weekly rent in the CBD rose to $750 in November 2024, compared with $690 in 2023, a 9% year-on-year jump. Vacancy stayed low, averaging 2.4% through 2024. Newly built CBD apartments have produced strong gross rental yields of 4.8%, and comprehensive landlord insurance plus thorough property management reviews can help shield those yields from operational swings.
Space is limited, too. Chances to build new developments inside the CBD grid are growing scarce, so existing apartments are likely to see significant capital appreciation. The “Melbourne CBD Market Outlook 2025” report states that “constraints on new supply should lead to growth in capital values as demand continues to outpace supply”.
Public works add another layer. Several major infrastructure projects strengthen Melbourne’s liveability and its draw as an investment destination. The Melbourne Greenline, due in 2025, is a $224 million project that will turn public spaces along the Yarra River into a 4-kilometer route with expanded recreation and event opportunities. The West Gate Tunnel Project, also due in 2025, is a major road upgrade that will offer drivers an alternative to the West Gate Bridge, easing congestion and Improving connectivity between Melbourne’s west and the CBD. The North East Link, scheduled for 2028, is Victoria’s largest road project. It will join key arterial roads in Melbourne’s north and east, cut travel times, and support urban growth across the region. The Queen Victoria Market Renewal, set for 2029, is a $268 million revitalization of the city’s iconic market, adding public spaces, restaurants, and activities to attract residents and visitors. The Suburban Rail Loop, due in 2035, will connect key suburbs, shorten commutes, and lift housing demand near transport hubs such as Clayton and Sunshine.
All of these projects sit within Victoria’s $107 billion infrastructure plan, which boosts Melbourne’s global appeal and drives long-term growth in property values. Investors pursuing commercial real estate loans or residential mortgages will find that properties near these transit corridors consistently outperform broader market averages.
The national economy supplies firm footing. As of late 2024, unemployment stood at 4.0%, well under the 10-year average of 5.3%, a sign of a resilient economy. Consumer confidence has also Improved markedly: the ANZ-Roy Morgan Index climbed 12 points year-on-year to reach 86.4 in December 2024. That optimism, along with inflation easing to 2.8% in September 2024, has created a favorable climate for property investment.
Interest rates may help further. Major banks, including ANZ and NAB, have forecast rate cuts expected to lower borrowing costs and stimulate more activity in the property market. By December 2025, the Reserve Bank of Australia’s cash rate is anticipated to drop to between 3.35% and 3.85%, which would Improve affordability for investors using home loans or investment property loans.
Put together, rapid population growth, transformative infrastructure, and strong rental performance make Melbourne CBD an exceptional investment opportunity. The scarcity of new developments within the CBD grid strengthens the case, since existing apartments are positioned for capital growth. Location ranks among the most critical of the many factors to weigh when buying in Melbourne. For investors who want to capitalize on the city’s robust market dynamics, the time to act is now. The advisory team invites readers to get in touch today to explore curated opportunities in Melbourne CBD apartments and to schedule a one-on-one portfolio consultation to secure a position in this thriving market.
One contrast sums up the picture: a city that needs 21,600 new dwellings by 2028 is on track to receive just 8,900 apartments. Population growth, climbing rents, and a pipeline of public works all point in the same direction.
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