The City of Melbourne estimates that the city will need 21,600 additional dwellings by 2028.
The apartment pipeline is expected to deliver only 8,900 new units, which leaves a supply deficit of 60%. That gap anchors the argument for Melbourne CBD apartments as an investment, and it points to considerable potential for price growth and rental returns.
The figures come from the ‘Melbourne CBD Market Outlook 2025’ report, which Urbis produced on commission from Far East Consortium, one of Australia’s most respected Melbourne property developers. The developer wanted a clearer picture of how the city’s property market works, what shapes purchasing behavior, and where the economy is headed in 2025 and beyond. The author of this analysis has spent ten years guiding clients through Victoria’s dynamic real estate cycles and says a more compelling window for strategic acquisition has rarely appeared. Melbourne CBD remains one of Australia’s most attractive property markets, backed by a growing population, transformative infrastructure projects, and strong rental demand. Making sense of that landscape requires a deep understanding of local market fundamentals.
Population is the starting point. Melbourne is set to overtake Sydney as Australia’s largest city by 2032, and its population is projected to reach 7.45 million by 2040. Immigration has fueled steady growth over the past decade. In 2024 alone, Melbourne welcomed 446,000 new overseas arrivals, adding to demand for housing. For anyone weighing real estate investment trusts against direct property acquisitions, the structural undersupply described above forms the bedrock of long-term capital appreciation.
Price is the next factor. Apartments in the CBD cost far less than detached houses, which is one of the advantages of buying an apartment over land. In 2024, the median apartment price in Melbourne CBD was 56% below the median for a detached house, putting ownership within reach of more buyers.
Rents tell a similar story. The median weekly rent in the CBD climbed to $750 in November 2024, up from $690 in 2023. That is a 9% year-on-year increase, and it came alongside a low vacancy rate that averaged 2.4% across 2024. Newly built CBD apartments have delivered strong gross rental yields of 4.8%. Comprehensive landlord insurance and thorough property management reviews can help protect those yields from operational swings.
Land is also running short. Opportunities for new developments within the CBD grid are becoming increasingly 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 a further layer. Several major infrastructure projects strengthen Melbourne’s liveability and its appeal as an investment destination. The Melbourne Greenline, due in 2025, is a $224 million project that will transform public spaces along the Yarra River into a 4-kilometer journey with expanded recreation and event opportunities. The West Gate Tunnel Project, also due in 2025, is a major road upgrade that will give 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, cutting travel times and supporting urban growth across the region. The Queen Victoria Market Renewal, set for 2029, is a $268 million revitalization of the city’s iconic market that will add public spaces, restaurants, and activities to draw residents and visitors. The Suburban Rail Loop, due in 2035, will link key suburbs, shorten commutes, and lift housing demand near transport hubs such as Clayton and Sunshine.
All of these projects belong to Victoria’s $107 billion infrastructure plan, which raises Melbourne’s global appeal and drives long-term growth in property values. Investors who are seeking commercial real estate loans or residential mortgages will find that properties near these transit corridors consistently outperform broader market averages.
The national economy provides firm footing for all of this. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, a sign of a resilient economy. Consumer confidence has Improved markedly too. The ANZ-Roy Morgan Index rose 12 points year-on-year to reach 86.4 in December 2024. That optimism, together with inflation falling to 2.8% in September 2024, has created a favorable environment for property investment.
Interest rates may help further. Major banks, including ANZ and NAB, have forecast rate cuts that are 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 fall to between 3.35% and 3.85%, which would Improve affordability for investors using home loans or investment property loans.
Taken 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 adds to that appeal, since existing apartments are positioned for capital growth. Location is 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 reach out 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.
Looking back at the numbers, one contrast stands out: a city that needs 21,600 new dwellings by 2028 is on track to receive 8,900 apartments. Population growth, rising rents, and a pipeline of public works all point in the same direction.
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