Here is the figure that frames everything else.
By 2028, the City of Melbourne estimates, the central business district will need 21,600 additional dwellings, yet the current pipeline contains only 8,900 new units. Supply, in other words, falls 60% short of projected need, and any investor weighing Melbourne apartments has reason to look closely at that gap.
The number comes from a report titled “Melbourne CBD Market Outlook 2025.” Far East Consortium, one of Australia’s most respected Melbourne property developers, commissioned Urbis to prepare it. The company wanted a sharper picture of how the city’s property market works, what moves buyers, and where the economy is heading in 2025 and beyond. The report concludes that Melbourne CBD is still among the country’s most attractive property markets, backed by a growing population, major infrastructure projects, and strong rental demand. To read that market properly, it helps to understand why apartments have held up so well as an asset class.
Start with people. Melbourne is projected to overtake Sydney as Australia’s largest city by 2032, and forecasts put its population at 7.45 million by 2040. Immigration has driven most of the growth over the past decade. In 2024 alone, 446,000 new overseas arrivals settled in Melbourne, adding to the pressure on housing.
One analyst, who says he has spent a decade studying property cycles, tells clients that scarce supply underlies long-term capital appreciation. When demand outstrips supply by a margin this wide, he says, urban real estate tends to command premium valuations.
Government spending forms the second pillar. Several large projects are Improving the city’s livability while raising its appeal to investors.
The Melbourne Greenline, due in 2025, is a $224 million effort to transform public spaces along the Yarra River. It will create a 4-kilometer route offering more recreation and event opportunities.
The West Gate Tunnel Project, also due in 2025, is a major road upgrade that gives drivers an alternative to the West Gate Bridge. It is designed to ease congestion and Improve links between Melbourne’s west and the CBD.
The North East Link, scheduled for 2028, is the largest road project in Victoria. It will connect key arterial roads in the north and east, cutting travel times and supporting urban growth across that part of the city.
The Queen Victoria Market Renewal, slated for 2029, is a $268 million revitalization of the city’s iconic market. It adds public spaces, restaurants, and activities for residents and visitors alike.
The Suburban Rail Loop, set for 2035, will link key suburbs and shorten commutes. It is expected to lift housing demand around transport hubs such as Clayton and Sunshine.
All of these projects sit within Victoria’s $107 billion infrastructure plan, which raises Melbourne’s global profile and drives long-term growth in property values. The same analyst says that in his experience, values climb faster in corridors directly touched by government capital spending.
The third factor is the product itself. Affordability is a large part of the appeal, and it is one advantage apartments hold over land. In 2024, the median price of a Melbourne CBD apartment was 56% below that of a detached house, which put apartments within reach of more buyers.
Rental data points the same way. Median weekly rent in the CBD climbed to $750 in November 2024, up from $690 in 2023, a 9% increase year on year. The vacancy rate averaged just 2.4% during 2024, and newly built CBD apartments delivered gross rental yields of 4.8%.
Meanwhile, development sites inside the CBD grid are getting harder to find, 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”.
The broader economy supports the picture. Australia’s economic fundamentals underpin the Melbourne market. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%. Consumer confidence has rebounded as well: the ANZ-Roy Morgan Index gained 12 points year on year to reach 86.4 in December 2024. Inflation fell to 2.8% in September 2024. Together, these trends have produced a favorable climate for property investment.
Interest rates may add further support. Major banks, including ANZ and NAB, forecast rate cuts that should lower borrowing costs and stimulate activity in the property market. The Reserve Bank of Australia’s cash rate is expected to fall to between 3.35% and 3.85% by December 2025, which would Improve affordability for investors looking to secure a Melbourne CBD apartment.
Location matters as much as any of these numbers. Buyers in Melbourne face many variables, and choosing the right location is among the most critical. Rapid population growth, transformative infrastructure, and strong rental performance combine to make the CBD an exceptional investment opportunity, and the scarcity of new development inside the grid only strengthens the case for existing apartments.
A 60% supply shortfall, a rising population, heavy public investment, and firm rents all point in one direction for Melbourne CBD apartments. Whether the gap between 21,600 needed dwellings and 8,900 planned ones narrows or widens will shape the city’s property market for years to come.
If you want to stay ahead of the latest news and analysis, tap subscribe so the next video finds you right away. Hit like if this one gave you something useful, and switch on the notification bell so new episodes reach you the moment they go live.”
