Start with the arithmetic.
The City of Melbourne estimates that the central business district will need 21,600 additional dwellings by 2028. The apartment projects now moving through the pipeline are expected to produce only 8,900. Supply, in other words, is projected to land 60% below demand.
The numbers come from “Melbourne CBD Market Outlook 2025,” a report prepared by Urbis for Far East Consortium, a Melbourne property developer regarded as one of the most respected in Australia. The company commissioned the research to understand how the city’s property market works, what drives buyer behavior, and where the economy is heading in 2025 and beyond.
The analyst behind this review has advised clients through the shifting real estate cycles of Victoria for ten years. According to that analyst, a better window for strategic acquisition has seldom opened. The case is that Melbourne CBD remains one of the most attractive property markets in Australia, supported by a growing population, transformative infrastructure projects, and strong rental demand. Making sense of that landscape, the analyst adds, takes a firm grasp of local market fundamentals.
The first fundamental is population. Melbourne is on track to pass Sydney as Australia’s largest city by 2032, and its population is projected to reach 7.45 million by 2040. Immigration has fueled steady growth across the past decade. In 2024 alone, 446,000 new overseas arrivals settled in the city, adding pressure to housing demand. For anyone weighing real estate investment trusts against direct property purchases, the structural undersupply described above underpins long-term capital appreciation.
The second is land. Room for new developments inside the CBD grid is running out, so existing apartments are likely to gain significant value over time. The report states that “constraints on new supply should lead to growth in capital values as demand continues to outpace supply”.
The third is the price of entry. A CBD apartment sells for far less than a detached house, which is one advantage of buying an apartment instead of land. In 2024, the median apartment price in Melbourne CBD ran 56% below the median price of a detached house, putting ownership within reach of a wider pool of buyers.
Rental figures point the same way. The median weekly rent in the CBD hit $750 in November 2024, compared with $690 in 2023, a year-on-year increase of 9%. Vacancy remained low, averaging 2.4% through 2024, and newly built CBD apartments have delivered strong gross rental yields of 4.8%. Comprehensive landlord insurance and thorough reviews of property management can help shield those yields from operational swings.
Public works add another layer of support. Several major infrastructure projects are strengthening Melbourne’s liveability and its draw as an investment destination, and they arrive in a steady sequence across the next decade.
Two are due in 2025. The Melbourne Greenline is a $224 million project that will turn public spaces along the Yarra River into a 4-kilometer route, widening the options for recreation and events. The West Gate Tunnel Project is a major road upgrade that gives drivers an alternative to the West Gate Bridge, and it is designed to ease congestion and Improve connectivity between Melbourne’s west and the CBD.
Scheduled for 2028, the North East Link is the largest road project in Victoria’s history. It will join key arterial roads in Melbourne’s north and east, cut travel times, and support urban growth across the region. In 2029 comes the Queen Victoria Market Renewal, a $268 million revitalization of the city’s iconic market that will add public spaces, restaurants, and activities meant to attract residents and visitors alike. The Suburban Rail Loop, due in 2035, will connect key suburbs, shorten commutes, and lift housing demand near transport hubs such as Clayton and Sunshine.
Every one of these projects sits inside Victoria’s $107 billion infrastructure plan, which raises Melbourne’s global profile and drives long-term growth in property values. Investors pursuing commercial real estate loans or residential mortgages will find that properties near these transit corridors consistently outperform broader market averages.
The national economy offers firm footing too. 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 Improved markedly as well. The ANZ-Roy Morgan Index climbed 12 points year-on-year to 86.4 in December 2024. That optimism, combined with inflation easing to 2.8% in September 2024, has created a favorable climate for property investment.
Interest rates may add momentum. Major banks, including ANZ and NAB, have forecast rate cuts that are expected to lower borrowing costs and stimulate 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.
Pulling these threads together, the review concludes that rapid population growth, transformative infrastructure, and strong rental performance make Melbourne CBD an exceptional investment opportunity. The scarcity of new developments inside the CBD grid strengthens that case, since existing apartments are positioned for capital growth. Location, the review notes, ranks among the most critical of the many factors to weigh when buying in Melbourne. For investors hoping to capitalize on the city’s robust market dynamics, the analyst’s message is that 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 schedule a one-on-one portfolio consultation to secure a position in this thriving market.
All of it rests on a single contrast: a city that needs 21,600 new dwellings by 2028 is set to receive just 8,900 apartments. With rents climbing, the population growing, and a long line of public works under way, the open question is how that gap will shape the CBD market in the years ahead.
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