Far East Consortium, one of Melbourne’s most respected developers, has commissioned Urbis to produce a study called the “Melbourne CBD Market Outlook 2025.
” The report sets out how the market works, what drives buyers, and where the economy is heading in 2025 and beyond. Its central finding is a single number: the city’s apartment pipeline falls 60 percent short of what Melbourne needs. On that basis, the report argues that the Melbourne CBD ranks among the strongest property markets in Australia.
The gap is easy to define. The City of Melbourne estimates that 21,600 additional dwellings will be required by 2028, but the current apartment pipeline contains just 8,900 new units. The report reads that mismatch as evidence of significant room for price growth and rental returns on CBD apartments.
Population is the force behind the demand. Melbourne is on course to pass Sydney as Australia’s largest city by 2032, and its population is projected to reach 7.45 million by 2040. Immigration has fed steady growth over the past decade, and in 2024 alone the city took in 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, in the report’s framing, is the foundation under all of this. Unemployment stood at 4.0 percent in late 2024, well under the 10-year average of 5.3 percent, a sign of a resilient national economy. Consumer confidence has recovered sharply, with the ANZ-Roy Morgan Index climbing 12 points from a year earlier to 86.4 in December 2024. Inflation cooled to 2.8 percent in September 2024. Taken together, these readings create a favorable climate for property investment and wealth management advisory services.
Borrowing costs are also expected to ease. Major banks, including ANZ and NAB, forecast rate cuts that would make credit cheaper and stimulate more activity in the property market. The Reserve Bank of Australia’s cash rate is expected to settle between 3.35 percent and 3.85 percent by December 2025, which would further Improve affordability for investors who rely on mortgage broker services or commercial real estate loans.
Public spending adds another layer. A series of major projects is lifting Melbourne’s liveability and its standing as an investment destination, and they arrive on a staggered schedule.
The Melbourne Greenline is due in 2025. This $224 million project will turn public space along the Yarra River into a 4 km corridor offering more room for recreation and events. The West Gate Tunnel Project is also due in 2025. It 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 opens 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 bring new public spaces, restaurants, and activities for residents and visitors. Last comes the Suburban Rail Loop, set for 2035, which will link key suburbs and shorten commutes. It is also expected to boost 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.
Against that backdrop, CBD apartments hold a distinct advantage. Affordability is a major source of demand, and it shows one benefit of buying an apartment instead of land. In 2024, the median price of a CBD apartment was 56 percent below that of a detached house, putting apartments within reach of buyers chasing high rental yields.
Rental figures tell the same story. Median weekly rent in the CBD rose to $750 in November 2024, up 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 also benefit existing stock. Sites for new development inside the CBD grid are getting 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 keeps outrunning supply. Effective property portfolio diversification strategies, it adds, often begin with securing high-performing urban assets such as Melbourne CBD apartments.
The report closes with a direct conclusion. 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.
Three figures sum up the picture: a 60 percent supply shortfall, a $107 billion infrastructure plan, and rents up 9 percent in a single year. Each one describes a market where demand is running ahead of supply. The open question is how fast the pipeline can respond to a city expected to hold 7.45 million residents by 2040.
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