Melbourne is on track to overtake Sydney by 2032 and become the biggest city in Australia.
The Melbourne CBD Market Outlook 2025 carries that forecast further, projecting a population of 7.45 million by 2040, and the projection sits at the center of the argument for buying apartments downtown.
Far East Consortium, one of the most respected property developers in Melbourne, commissioned the report. The company brought in Urbis to study how the city’s property market operates, what shapes buyer behavior, and what the economy may look like in 2025 and beyond. The advisor behind this material has spent a decade guiding clients through Victoria’s real estate cycles and says a better moment for a strategic purchase has rarely come along. In this advisor’s view, Melbourne CBD remains among the most attractive property markets in the country, backed by a growing population, major infrastructure projects, and strong rental demand.
The case begins with people. Immigration has driven steady growth across Melbourne over the past decade, and 446,000 new overseas arrivals came to the city in 2024 alone. Housing demand keeps climbing as a result. The City of Melbourne estimates that 21,600 additional dwellings will be needed by 2028, yet only 8,900 new apartments are in the pipeline. That leaves a supply deficit of 60%. For investors weighing real estate investment trusts against direct property purchases, this structural shortfall is the foundation of long-term capital appreciation, and it points to potential for both price growth and rental returns.
Cost is a second draw. Apartments sell for less than detached houses, and in 2024 the median apartment price in the CBD sat 56% below the median house price. That gap makes apartments the more accessible entry point.
Rental data tells a similar story. Median weekly rent reached $750 in November 2024, compared with $690 in 2023, a 9% increase year-on-year. Vacancy remained tight, averaging 2.4% across 2024, and newly built CBD apartments delivered gross rental yields of 4.8%. Space for new development inside the CBD grid is running out, so existing apartments look set for significant capital growth. 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”. Investors can shield those yields from operational swings by securing comprehensive landlord insurance and carrying out thorough property management reviews.
Government spending adds another layer of support. Victoria has an infrastructure plan worth $107 billion, which lifts Melbourne’s global profile and underpins long-term property values. Five projects within the plan stand out.
The Melbourne Greenline, due in 2025, is a $224 million effort to reshape public spaces along the Yarra River. It will create a 4 km route with expanded recreation and event options.
The West Gate Tunnel Project, also due in 2025, is a major road upgrade that offers drivers an alternative to the West Gate Bridge. It should reduce congestion and Improve links 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. It brings new public spaces, restaurants, and activities designed to attract residents and visitors alike.
The Suburban Rail Loop, planned for 2035, will connect key suburbs, shorten commutes, and boost housing demand near transport hubs such as Clayton and Sunshine.
For investors pursuing commercial real estate loans or residential mortgages, properties close to these transit corridors have consistently outperformed broader market averages.
The national economy provides the backdrop. As of late 2024, unemployment stood at 4.0%, well under the 10-year average of 5.3%, a sign of economic resilience. Consumer confidence has recovered as well: the ANZ-Roy Morgan Index gained 12 points year-on-year to reach 86.4 in December 2024. Inflation eased to 2.8% in September 2024. Together, these trends have produced a favorable climate for property investment.
Lending conditions may offer further support. Major banks, including ANZ and NAB, forecast interest rate cuts that should lower borrowing costs and 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%, which would Improve affordability for investors using home loans or investment property loans.
Rapid population growth, transformative infrastructure, and strong rental performance combine to make Melbourne CBD an exceptional investment opportunity, and the scarcity of new development inside the CBD grid leaves existing apartments positioned for capital growth. Among the many factors to weigh when buying in Melbourne, location remains one of the most critical. For investors who want to capitalize on the market’s strength, the advisory team invites them to get in touch to explore curated opportunities in Melbourne CBD apartments and to schedule a one-on-one portfolio consultation.
Every figure points in one direction: a growing city, a shrinking window for new supply, and rents that keep rising. Whether those forces carry the market through 2025 and beyond is a question each prospective buyer will have to answer for themselves.
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