Melbourne is on track to pass Sydney as Australia’s largest city by 2032, and its population is forecast to reach 7.
45 million by 2040. Those two projections sit at the center of a new market study that ranks the heart of the city among the strongest property markets in the country.
The study is called the “Melbourne CBD Market Outlook 2025.” Far East Consortium, one of Australia’s most respected Melbourne property developers, commissioned the research firm Urbis to write it. The developer wanted a clearer picture of how the city’s property market works, what drives buyers, and where the economy is headed in 2025 and beyond. The analyst behind the report has spent ten years advising clients through Victoria’s dynamic real estate cycles, and says a better moment for strategic acquisition has rarely come along in that span. The assessment concludes that Melbourne CBD rests on a growing population, transformative infrastructure projects, and strong rental demand. It adds that reading the landscape correctly requires a deep understanding of local market fundamentals.
The report begins with the numbers on housing demand. Immigration has driven steady growth over the past decade, and in 2024 alone Melbourne took in 446,000 new overseas arrivals, adding pressure on housing. New supply is lagging well behind. The City of Melbourne estimates the city will need 21,600 additional dwellings by 2028, but the current apartment pipeline is expected to deliver just 8,900. That works out to a 60% shortfall. According to the report, a gap this wide leaves ample room for both price growth and rental returns, and it forms the core argument for buying apartments in Melbourne CBD. For readers weighing real estate investment trusts against direct property purchases, the author describes the undersupply as the foundation for long-term capital appreciation.
Land is a second limit on supply. Sites for new development inside the CBD grid are growing scarcer, so existing apartments are likely to see significant capital appreciation. In the report’s words, “constraints on new supply should lead to growth in capital values as demand continues to outpace supply”.
Price of entry is where apartments diverge from houses. 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 was 56% below the median for a detached house, putting ownership within reach of more buyers.
Rental figures tell a similar story. The median weekly rent in the CBD hit $750 in November 2024, up from $690 in 2023, a 9% rise year-on-year. Vacancy stayed low, averaging 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.
The wider economy offers firm footing as well. As of late 2024, unemployment was 4.0%, well under the 10-year average of 5.3%, which the report reads as a sign of economic resilience. Consumer confidence has also Improved markedly: the ANZ-Roy Morgan Index climbed 12 points year-on-year to 86.4 in December 2024. Inflation eased to 2.8% in September 2024, and together with that rising optimism, it has created a favorable climate for property investment.
Interest rates could provide more support. Major banks, including ANZ and NAB, have forecast rate cuts that are expected to reduce borrowing costs and stimulate activity in the property market. The Reserve Bank of Australia’s cash rate is anticipated to drop to between 3.35% and 3.85% by December 2025. That would Improve affordability for investors using home loans or investment property loans.
Public works add another layer. Several major infrastructure projects are Improving Melbourne’s liveability and its appeal 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 route, with expanded recreation and event opportunities. 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. The North East Link, scheduled for 2028, is Victoria’s largest road project, and 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 attract residents and visitors. The Suburban Rail Loop, due in 2035, will link key suburbs and shorten commutes, and 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 enhances Melbourne’s global appeal and drives long-term growth in property values. Investors seeking commercial real estate loans or residential mortgages will find, the report says, that properties near these transit corridors consistently outperform broader market averages.
The author’s conclusion is direct. Rapid population growth, transformative infrastructure, and strong rental performance make Melbourne CBD an exceptional investment opportunity. The scarcity of new development inside the CBD grid strengthens that 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.
Three figures carry much of the report’s weight: a 60% supply shortfall, a 2.4% vacancy rate, and a $107 billion infrastructure plan. Each feeds the same argument about the direction of the CBD market. What remains to be seen is whether new supply can ever close the gap between the 21,600 dwellings the city needs and the 8,900 now in the pipeline.
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