A report commissioned by Far East Consortium, one of Australia’s most respected Melbourne property developers, puts a hard number on a mismatch in the city’s housing market.
Urbis prepared the Melbourne CBD Market Outlook 2025 for the company, which wanted to understand how Melbourne’s property market works, what drives buyer behavior, and where the economy is heading in 2025 and beyond.
The central finding concerns supply. The City of Melbourne estimates that the CBD will need 21,600 additional dwellings by 2028. Developers have planned only 8,900 new apartments, which leaves the pipeline roughly 60% short of what the city requires.
The author, who says he has spent ten years analyzing property cycles, tells clients that limited supply is what underpins capital appreciation over time. In his view, urban property tends to command premium valuations when demand runs this far ahead of new construction.
People are the source of that demand. The report projects that Melbourne will have 7.45 million residents by 2040 and expects it to surpass Sydney as Australia’s largest city by 2032. Immigration has driven much of the growth. The city has recorded steady population gains for a decade, and in 2024 alone it welcomed 446,000 new arrivals from overseas. Building has not kept pace with that inflow, and the gap points to room for both price growth and rental returns on CBD apartments.
Public spending is reshaping the city at the same time. Victoria has committed to a $107 billion infrastructure plan, which lifts Melbourne’s international profile and supports property values over the long run. The author says that, in his experience, values rise faster in corridors directly touched by government capital spending.
Five projects anchor that plan, each on its own timeline. Two are scheduled for 2025. The Melbourne Greenline is a $224 million effort to remake 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, eases congestion, and Improves links between Melbourne’s west and the CBD.
The North East Link follows in 2028. As Victoria’s largest road project, it will join key arterial roads across Melbourne’s north and east, shortening travel times and supporting urban growth there. In 2029, the Queen Victoria Market Renewal will deliver a $268 million revitalization of the city’s iconic market, with new public spaces, restaurants, and activities meant to draw residents and visitors. Furthest out, in 2035, is the Suburban Rail Loop. It will connect key suburbs, shorten commutes, and raise housing demand near transport hubs such as Clayton and Sunshine.
Price also widens the field of potential buyers. In 2024, the median price of a CBD apartment sat 56% below that of a detached house, putting apartments within reach of more people. That discount is one of the advantages of buying an apartment rather than land.
Rental data points the same way. The median weekly rent in the CBD reached $750 in November 2024, up from $690 in 2023, a 9% increase year over year. Vacancy averaged just 2.4% across 2024, and newly built CBD apartments achieved gross rental yields of 4.8%. With the CBD grid running out of space for new projects, existing apartments are likely to post significant capital gains. The Melbourne CBD Market Outlook 2025 states that “constraints on new supply should lead to growth in capital values as demand continues to outpace supply.”
The broader economy supports the picture. Late in 2024, unemployment stood at 4.0%, well below its 10-year average of 5.3%. Consumer confidence has recovered too: the ANZ-Roy Morgan Index rose 12 points from a year earlier to 86.4 in December 2024. Inflation fell to 2.8% in September 2024. Taken together, the trends set up favorable conditions for property investors.
Borrowing costs are expected to ease as well. Major banks, including ANZ and NAB, forecast interest rate cuts, which should stimulate activity in 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%, Improving affordability for investors seeking CBD apartments.
The author pulls these threads together. Fast population growth, major infrastructure, and solid rental performance give the Melbourne CBD an unusual mix of strengths, and the limited scope for new development inside the grid adds to its appeal, since existing apartments are positioned for capital growth. Buyers have many factors to weigh, and location is among the most critical. For investors who want to capitalize on the market’s strong fundamentals, the author says the time to act is now. He invites readers to browse a hand-selected portfolio of high-end apartments in the Melbourne CBD and to schedule a private consultation with a senior advisory team to lock in a position in this market.
The pipeline sits about 60% below the city’s stated need, and population, infrastructure, rents, and the wider economy all point in the same direction. The open question is how soon investors choose to respond.
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