By 2032, Melbourne is expected to overtake Sydney as the largest city in Australia, and by 2040 its population is forecast to reach 7.
45 million. Those two projections frame the Melbourne CBD Market Outlook 2025, a report that sets the city’s growth path beside a housing gap that its numbers make hard to dismiss.
Far East Consortium, a developer with a strong reputation in the Melbourne market, commissioned the study, and the research firm Urbis wrote it. The brief covered three questions: how the city’s property market works, what influences the decisions buyers make, and where the economy is headed in 2025 and the years after.
The supply figures are the report’s sharpest finding. The City of Melbourne estimates that 21,600 additional dwellings will be needed by 2028, yet the apartment pipeline holds just 8,900 new units. That leaves a supply shortfall of 60%.
The commentary on these results comes from an author with ten years in local real estate, including time spent through several market cycles. He calls the data compelling and highly actionable for disciplined investors who are weighing commercial real estate finance against high-yield residential assets. In his assessment, Melbourne has outgrown its Image as a lively cultural center and turned into an engine of wealth creation. Population growth, large-scale infrastructure projects, and healthy rental demand, he says, combine to give property investors long-term security and strong capital appreciation.
His analysis begins with people. Immigration has fueled steady population growth over the past decade, and in 2024 alone, 446,000 new arrivals came to the city from overseas. That inflow keeps housing demand high and has shifted the baseline of housing affordability across inner-city suburbs. Since supply is not keeping up, the author sees room for price growth and solid rental returns on CBD apartments. For anyone building property portfolio management strategies, he regards a purchase in an undersupplied urban core as one of the most dependable hedges against inflation, and as a way to lock in predictable cash flow.
Public spending is his second theme. Major infrastructure projects make Melbourne more livable and a more attractive place to invest, and they carry real weight in property valuation models. The report highlights five of them.
The Melbourne Greenline is due in 2025. The $224 million project will reshape public space along the Yarra River and create a route of 4 kilometers with expanded recreation and event options, which in turn lifts the value of neighboring residential property. The West Gate Tunnel Project is also scheduled for 2025. This major road upgrade gives drivers an alternative to the West Gate Bridge, eases congestion, and Improves connections between Melbourne’s west and the CBD.
The North East Link arrives in 2028. It is the largest road project in Victoria’s history, linking 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 is set for 2029. That $268 million revitalization of the iconic market will add new public spaces, restaurants, and activities that draw residents and visitors alike.
The Suburban Rail Loop is the furthest out, scheduled for 2035. It will link key suburbs and shorten commutes, and it is expected to boost housing demand around transport hubs such as Clayton and Sunshine.
All five projects fall under Victoria’s $107 billion infrastructure plan, which strengthens Melbourne’s global appeal and drives long-term growth in property values. From a wealth advisory standpoint, the author says, owning real estate near state-backed infrastructure secures lasting tenant demand and protects capital through economic shifts.
Price is the next factor. CBD apartments carry a clear cost advantage, because affordability relative to detached housing is a core driver of demand and a major benefit of buying an apartment rather than land. In 2024, the median apartment price in the Melbourne CBD was 56% below the median for a detached house. That puts apartments within much easier reach of first-time buyers and institutional investors alike.
Rental data points in the same direction. The median weekly rent in the CBD reached $750 in November 2024, up from $690 in 2023, a robust 9% increase year-on-year. Vacancy stayed very low, averaging 2.4% across 2024. Newly built CBD apartments have delivered gross rental yields of 4.8%, which makes them more attractive to investors who want to optimize passive income through strategic acquisitions.
Scarcity reinforces all of this. Opportunities for new development inside the CBD grid are running out, so existing Melbourne CBD apartments are likely to see significant capital appreciation. According to the Melbourne CBD Market Outlook 2025, limits on new supply should produce consistent growth in capital values, with demand continuing to comfortably outpace supply. For investors who study historical trends, scarcity in prime locations has always translated into superior mid-to-long-term returns.
The national economy offers a stable footing as well. Australia’s strong fundamentals underpin Melbourne’s property market and provide a steady backdrop for leveraged investments and mortgage refinancing strategies. As of late 2024, unemployment stood at 4.0%, well below its 10-year average of 5.3%, which reflects a resilient labor market and robust corporate health.
Sentiment has Improved too. The ANZ-Roy Morgan Index climbed 12 points year-on-year to 86.4 in December 2024, and inflation fell to 2.8% in September 2024. Together, these trends have created a highly favorable environment for property investment and wealth accumulation.
Borrowing costs are expected to ease. Major banking institutions, including ANZ and NAB, have forecast interest rate cuts, which should lower the cost of borrowing and stimulate more activity in the residential property market. By December 2025, the Reserve Bank of Australia’s cash rate is anticipated to fall to between 3.35% and 3.85%. That would further Improve affordability and borrowing capacity for smart investors entering the market.
The author pulls this evidence into three pillars: rapid population growth, transformative infrastructure, and strong rental performance. The acute scarcity of new development inside the CBD grid sharpens the appeal and leaves existing Melbourne CBD apartments well positioned for sustained capital growth. He notes that building a diversified investment portfolio means working through the complexities of property acquisition, which calls for a clear strategy and a grasp of local market fundamentals. For investors who want to capitalize on Melbourne’s robust market dynamics, he argues, the time to act is now. His advice is to explore the potential of Melbourne CBD apartments and to consult a qualified property expert or financial advisor. That, he says, is how to secure a position in this thriving market and take the next step toward long-term financial independence.
Strip the report down and its figures converge on a single picture: 21,600 dwellings needed against 8,900 in the pipeline, a vacancy rate of 2.4%, and a population heading toward 7.45 million by 2040. How investors weigh those numbers against their own goals is the question that remains.
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