Three figures anchor a new study of central Melbourne: a 60% shortfall in new apartments, a $107 billion state infrastructure plan, and a population forecast of 7.
45 million by 2040. Far East Consortium, a respected Melbourne property developer, commissioned the consultancy Urbis to produce the study, titled “Melbourne CBD Market Outlook 2025.” Urbis was asked to examine how the city’s property market operates, what motivates buyers, and where the economy may be heading in 2025 and the years after. Its overall verdict is that the CBD remains one of the most attractive property markets in the country, backed by population growth, major public works, and strong demand from renters.
The supply problem is the report’s starting point. The City of Melbourne estimates that the CBD will need 21,600 additional dwellings by 2028. Only 8,900 new apartments are in the pipeline, which leaves a gap of 60%. Available land for new projects inside the CBD grid is also running short. In the report’s words, “constraints on new supply should lead to growth in capital values as demand continues to outpace supply.” Urbis expects existing apartments to appreciate significantly, and says the shortage leaves room for both price gains and rental returns. Whether an investor is looking at real estate investment trusts or direct property purchases, the authors argue, this structural undersupply supports long-term capital appreciation.
Demand is rising on the other side of the ledger. Melbourne is on track to overtake Sydney as Australia’s largest city by 2032. Immigration has driven steady growth over the past decade, and in 2024 alone, 446,000 new overseas arrivals came to Melbourne, adding further pressure on housing.
Public spending forms the next layer of support. Victoria’s $107 billion infrastructure plan lifts Melbourne’s international profile and underpins long-term property values. The report singles out five major projects.
The Melbourne Greenline, due in 2025, is a $224 million project that reshapes public spaces along the Yarra River. It opens a 4 km route and widens the options for recreation and events. The West Gate Tunnel Project, also due in 2025, is a major road upgrade that gives drivers an alternative to the West Gate Bridge, eases congestion, and strengthens links between Melbourne’s west and the CBD.
The North East Link, scheduled for 2028, is the largest road project in Victoria’s history. It connects key arterial roads across the north and east, shortens travel times, and supports urban growth in that part of the region. The Queen Victoria Market Renewal, set for 2029, is a $268 million revitalization of the city’s iconic market, bringing new public spaces, restaurants, and activities designed to draw residents and visitors alike. Expected in 2035, the Suburban Rail Loop links key suburbs, shortens commutes, and increases housing demand around transport hubs such as Clayton and Sunshine. For investors pursuing commercial real estate loans or residential mortgages, the report says properties near these transit corridors consistently outperform broader market averages.
Prices also work in apartments’ favor. In 2024, the median price of a CBD apartment was 56% lower than that of a detached house, which puts ownership within reach of more buyers.
Rental figures tell a similar story. The median weekly rent in the CBD reached $750 in November 2024, up from $690 in 2023, a 9% increase year on year. Vacancies stayed tight, averaging 2.4% through 2024, and newly built CBD apartments delivered gross rental yields of 4.8%. Comprehensive landlord insurance and thorough property management reviews, the report adds, help protect those yields from operational swings.
The broader economy offers backing too. Unemployment stood at 4.0% at the end of 2024, well under the 10-year average of 5.3%, which the report reads as a sign of a resilient national economy. Consumer confidence has recovered as well: the ANZ-Roy Morgan Index rose 12 points year on year to 86.4 in December 2024. Inflation fell to 2.8% in September 2024, and together with Improved sentiment, that has created a favorable climate for property investment.
Borrowing could soon get cheaper. Major banks, including ANZ and NAB, forecast rate cuts that should lower borrowing costs and stimulate activity in the property market. By December 2025, the Reserve Bank of Australia’s cash rate is expected 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 report concludes that rapid population growth, transformative infrastructure, and strong rental performance make the Melbourne CBD an exceptional investment opportunity, with the scarcity of new developments inside the grid adding to its appeal. Existing apartments, it says, are positioned for capital growth. Location remains one of the most critical of the many factors in buying in Melbourne, and for investors who want to capitalize on the market’s strength, the authors say the time to act is now. They invite readers to contact the advisory team to explore curated opportunities in Melbourne CBD apartments and to book a one-on-one portfolio consultation.
The numbers in the report all lean the same way: a growing population, a 60% supply gap, and a $107 billion infrastructure plan. What the report leaves open is how long that window will stay available to investors.
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