The City of Melbourne estimates that the central business district will need 21,600 additional dwellings by 2028.
Only 8,900 new apartments are in the pipeline, which leaves a shortfall of about 60%. That gap is the centerpiece of a new report titled “Melbourne CBD Market Outlook 2025.” Urbis prepared it for Far East Consortium, one of Australia’s most respected Melbourne property developers. The study looks at how the city’s property market works, what drives buyer behavior, and where the economy is heading in 2025 and beyond. Its conclusion is that the CBD remains one of the most attractive property markets in the country, supported by population growth, major infrastructure projects, and strong demand from renters.
Population is where the demand begins. Melbourne took in 446,000 new overseas arrivals in 2024 alone, and Immigration has powered steady growth across the city for a decade. Melbourne is on track to overtake Sydney as Australia’s largest city by 2032, and projections put its population at 7.45 million by 2040. Each new wave of arrivals adds to the pressure on the housing stock.
The report finds its sharpest Imbalance on the supply side. It reads the 60% shortfall as room for both price growth and rental returns. Whether an investor is looking at real estate investment trusts or buying property directly, the document says this structural undersupply underpins long-term capital appreciation. Sites available for new development inside the CBD grid are also running short, so existing apartments are likely to post significant capital gains. The report puts it this way: “constraints on new supply should lead to growth in capital values as demand continues to outpace supply.”
Price strengthens the case. Apartments cost far less than detached houses, and the report counts that gap as one benefit of buying an apartment rather than land. In 2024, the median price of a CBD apartment was 56% below the median for a detached house, which put ownership within reach of a wider pool of buyers.
Rental data points in the same direction. Median weekly rent in the CBD rose to $750 in November 2024 from $690 in 2023, an increase of 9% year on year. Vacancies stayed tight, averaging 2.4% across 2024. Newly built CBD apartments delivered strong gross rental yields of 4.8%. The report adds that comprehensive landlord insurance and thorough property management reviews can help protect those yields from operational swings.
The broader economy adds further support. As of late 2024, unemployment stood at 4.0%, well under the 10-year average of 5.3%, which the report takes as a sign of a resilient economy. Consumer confidence has recovered as well: the ANZ-Roy Morgan Index rose 12 points year on year to 86.4 in December 2024. Inflation eased to 2.8% in September 2024. Combined with Improved sentiment, those readings have created a favorable climate for property investment.
Borrowing costs may soften too. Major banks, including ANZ and NAB, forecast rate cuts that should reduce the cost of credit and stimulate the property market. By December 2025, the Reserve Bank of Australia’s cash rate is expected to fall to between 3.35% and 3.85%. That would Improve affordability for investors who use home loans or investment property loans.
Public spending reinforces the outlook. Victoria’s $107 billion infrastructure plan lifts Melbourne’s global profile and supports long-term property values, and the report singles out five projects.
Two are due in 2025. The Melbourne Greenline is a $224 million effort to reshape public spaces along the Yarra River, creating a 4 km route with more recreation and event opportunities. The West Gate Tunnel Project is a major road upgrade that gives drivers an alternative to the West Gate Bridge, with the aim of easing congestion and tightening links between Melbourne’s west and the CBD.
The North East Link, scheduled for 2028, is the largest road project in Victoria’s history. It connects key arterial roads across the city’s north and east, shortens travel times, and supports urban growth in that region. In 2029, the Queen Victoria Market Renewal will deliver a $268 million revitalization of the city’s iconic market, adding public spaces, restaurants, and activities for residents and visitors. The Suburban Rail Loop, expected in 2035, will link key suburbs, shorten commutes, and lift housing demand around transport hubs such as Clayton and Sunshine. For investors weighing commercial real estate loans or residential mortgages, the report says properties near these transit corridors consistently outperform broader market averages.
Taken together, the report describes Melbourne CBD as an exceptional investment opportunity, built on rapid population growth, transformative infrastructure, and strong rental performance. The scarcity of new developments inside the CBD grid adds to that appeal, and existing apartments are positioned for capital growth. Location remains one of the most critical of the many factors in buying in Melbourne. For investors who want to capitalize on the market’s strength, the report’s message is that the time to act is now, and it invites readers to contact the advisory team to explore curated opportunities in Melbourne CBD apartments and to schedule a one-on-one portfolio consultation.
The figures all lean one way: a growing population, a 60% supply gap, and a $107 billion infrastructure plan. What remains open is how long that window will stay available to investors.
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