Here is the number that frames the whole story: 21,600.
That is how many additional dwellings the City of Melbourne estimates the city will need by 2028. The apartment pipeline, meanwhile, is expected to deliver just 8,900 new units. The shortfall comes to 60%, and it is the central argument for buying into Melbourne CBD apartments, since it suggests considerable room for both price growth and rental returns.
The figures appear in the “Melbourne CBD Market Outlook 2025” report. Urbis produced it on commission from Far East Consortium, one of Australia’s most respected Melbourne property developers. The developer wanted a sharper view of how the city’s property market functions, what drives purchasing behavior, and where the economy is heading 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 stronger window for strategic acquisition has rarely opened. In this view, Melbourne CBD is still one of Australia’s most attractive property markets, supported by a growing population, transformative infrastructure projects, and strong rental demand. Reading that landscape correctly calls for a deep grasp of local market fundamentals.
Start with people. Melbourne is set to pass Sydney as Australia’s largest city by 2032, and its population is projected to hit 7.45 million by 2040. Immigration has powered steady growth across the past decade. In 2024 alone, Melbourne received 446,000 new overseas arrivals, which added to housing demand. For anyone comparing real estate investment trusts with direct property purchases, the structural undersupply described above is the foundation for long-term capital appreciation.
Cost is the second piece. CBD apartments sell for far less than detached houses, which is one advantage of choosing an apartment over land. In 2024, the median apartment price in Melbourne CBD sat 56% below the median for a detached house, bringing ownership within reach of more buyers.
Rents point the same way. The median weekly rent in the CBD rose to $750 in November 2024, compared with $690 in 2023. That is a 9% year-on-year jump, and it arrived alongside a low vacancy rate that averaged 2.4% across 2024. Newly built CBD apartments have produced strong gross rental yields of 4.8%. Comprehensive landlord insurance and thorough property management reviews can help shield those yields from operational swings.
Land itself is in short supply. Openings for new developments inside the CBD grid are growing scarcer, 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 another layer. Several major infrastructure projects strengthen Melbourne’s liveability and its pull as an investment destination. The Melbourne Greenline, due in 2025, is a $224 million project that will turn 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 connect 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, adding 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.
Every one of these projects sits within Victoria’s $107 billion infrastructure plan, which raises Melbourne’s global appeal and drives long-term growth in property values. Investors seeking commercial real estate loans or residential mortgages will find that properties near these transit corridors consistently outperform broader market averages.
The national economy supplies firm footing. As of late 2024, unemployment stood at 4.0%, well under the 10-year average of 5.3%, a sign of a resilient economy. Consumer confidence has also Improved markedly. The ANZ-Roy Morgan Index climbed 12 points year-on-year to reach 86.4 in December 2024. That optimism, along with inflation easing to 2.8% in September 2024, has produced a favorable climate for property investment.
Interest rates may lend further support. Major banks, including ANZ and NAB, have forecast rate cuts that are expected to reduce borrowing costs and spark 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.
Put together, rapid population growth, transformative infrastructure, and strong rental performance make Melbourne CBD an exceptional investment opportunity, in the author’s assessment. The scarcity of new developments inside the CBD grid strengthens the case, since existing apartments are positioned for capital growth. Location ranks 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 author says the time to act is now. The advisory team invites readers to get in touch today to explore curated opportunities in Melbourne CBD apartments and to book a one-on-one portfolio consultation to secure a position in this thriving market.
Step back from the details and one contrast remains: 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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