Melbourne’s apartment pipeline is 60 percent short of what the city needs.
That single figure sits at the center of a new report arguing that the Melbourne CBD is one of the strongest property markets in Australia. Far East Consortium, one of Melbourne’s most respected developers, commissioned Urbis to produce the “Melbourne CBD Market Outlook 2025” to explain how the market works, what motivates buyers, and where the economy is headed in 2025 and beyond.
Begin with the gap itself. The City of Melbourne estimates the city will need 21,600 more dwellings by 2028, yet the current apartment pipeline holds only 8,900 new units. That mismatch is the 60 percent shortfall, and the report reads it as a sign of considerable room for price growth and rental returns on CBD apartments. Demand is being pushed by population. Melbourne is on track to overtake Sydney as Australia’s largest city by 2032, and its population is projected to reach 7.45 million by 2040. Immigration has driven steady growth for a decade, and in 2024 alone the city received 446,000 new overseas arrivals. For anyone weighing a real estate investment, the report stresses, understanding demographic shifts is essential to building long-term wealth through property.
The economy underpins all of this, and the report treats it as the foundation. Unemployment stood at 4.0 percent in late 2024, well below the 10-year average of 5.3 percent, which signals a resilient national economy. Consumer confidence has rebounded sharply: the ANZ-Roy Morgan Index rose 12 points year-on-year to 86.4 in December 2024. Inflation eased to 2.8 percent in September 2024. Together, these readings create a favorable climate for property investment and wealth management advisory services.
Borrowing costs should also fall. Major banks, including ANZ and NAB, forecast rate cuts that would lower the price of credit and encourage more activity in the property market. The Reserve Bank of Australia’s cash rate is expected to land between 3.35 percent and 3.85 percent by December 2025. That would further Improve affordability for investors who use mortgage broker services or commercial real estate loans.
Government spending adds another layer. A string of major projects is raising Melbourne’s liveability and its profile as an investment destination. The Melbourne Greenline, due in 2025, is a $224 million project that will convert public space along the Yarra River into a 4 km corridor with more room for recreation and events. Also due in 2025, the West Gate Tunnel Project is a major road upgrade that gives drivers an alternative to the West Gate Bridge, easing congestion and Improving connectivity between Melbourne’s west and the CBD. In 2028, the North East Link arrives as the largest road project in Victoria’s history, joining key arterial roads in the city’s north and east, cutting travel times, and supporting urban growth across the region. The Queen Victoria Market Renewal follows in 2029, a $268 million revitalization of the city’s iconic market that will add new public spaces, restaurants, and activities for residents and visitors. Finally, the Suburban Rail Loop, set for 2035, will connect key suburbs and shorten commutes. It is also expected to lift housing demand near transport hubs such as Clayton and Sunshine.
All of these projects fall under Victoria’s $107 billion infrastructure plan, which strengthens Melbourne’s global appeal and drives long-term growth in property values. For astute investors, the report notes, proximity to these transport networks correlates directly with higher tenant retention and sustainable capital appreciation.
Within that setting, CBD apartments hold a distinct edge. Affordability is a major source of demand, and it illustrates one benefit of buying an apartment rather than land. In 2024, the median price of a CBD apartment sat 56 percent below that of a detached house, which puts apartments within reach of buyers chasing high rental yields.
Rental data points the same way. Median weekly rent in the CBD climbed to $750 in November 2024 from $690 in 2023, a 9 percent year-on-year increase. The vacancy rate averaged a low 2.4 percent across 2024, and newly built CBD apartments delivered gross rental yields of 4.8 percent.
Scarcity may help existing stock as well. Sites for new development inside the CBD grid are becoming harder to find, so existing apartments are likely to see significant capital appreciation. The report states that constraints on new supply should push capital values higher as demand continues to outrun supply. Effective property portfolio diversification strategies, it adds, often start with securing high-performing urban assets such as Melbourne CBD apartments.
The report’s conclusion is direct. Rapid population growth, transformative infrastructure, and strong rental performance make the Melbourne CBD an exceptional investment opportunity, and the shortage of new development inside the grid adds to its appeal. Buyers face many factors when purchasing in Melbourne, and location ranks among the most critical. Working with a qualified financial advisor or buyer’s agent helps keep a portfolio aligned with current macroeconomic shifts. For investors looking to capitalize on the strength of Melbourne’s market, the report says the time to act is now.
Step back and the pattern is clear: a 60 percent supply shortfall, a $107 billion infrastructure plan, and rents up 9 percent in a single year. Each figure describes a market where demand is outpacing supply. What remains unsettled is how quickly the pipeline can respond to a city expected to reach 7.45 million residents by 2040.
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