The study was produced by Urbis for the Far East Consortium, one of Melbourne’s most respected developers. It lays out how the market works, what motivates buyers, and where the economy is heading in 2025 and beyond. On the strength of its findings, the report ranks the Melbourne CBD among the strongest property markets in Australia.
The shortfall comes first. The City of Melbourne estimates the city will need 21,600 additional dwellings by 2028, yet the current apartment pipeline holds only 8,900 new units. That means supply falls 60 percent short of what Melbourne requires. The report treats the mismatch as evidence of significant room for price growth and rental returns on CBD apartments.
Demand starts with people. Melbourne is on course to overtake Sydney as Australia’s largest city by 2032, and its population is projected to reach 7.45 million by 2040. Immigration has driven steady growth over the past decade, and in 2024 alone the city received 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 supplies the foundation, according to the report. Unemployment sat at 4.0 percent in late 2024, well below the 10-year average of 5.3 percent, which points to a resilient national economy. Consumer confidence has rebounded sharply: the ANZ-Roy Morgan Index rose 12 points from a year earlier to reach 86.4 in December 2024. Inflation eased to 2.8 percent in September 2024. Together, these readings create a favorable climate for property investment and wealth management advisory services.
Borrowing costs are also expected to fall. Major banks, including ANZ and NAB, forecast rate cuts that would make credit cheaper and stimulate 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. That would Improve affordability further for investors who rely on mortgage broker services or commercial real estate loans.
Public spending adds another layer. A series of major projects is raising Melbourne’s liveability and its standing as an investment destination, and they come online on a staggered schedule.
Two are due in 2025. The Melbourne Greenline, a $224 million project, will convert public space along the Yarra River into a 4 km corridor with more room for recreation and events. The West Gate Tunnel Project, a major road upgrade, will give 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. It joins key arterial roads in the city’s north and east, cuts travel times, and supports urban growth across the region. The Queen Victoria Market Renewal follows in 2029. This $268 million revitalization of the city’s iconic market will bring new public spaces, restaurants, and activities for residents and visitors. The Suburban Rail Loop arrives last, in 2035. It will link key suburbs and shorten commutes, and it is also expected to boost housing demand near transport hubs such as Clayton and Sunshine.
All of these projects sit within 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.
With that backdrop in place, the report turns to the apartments themselves, which it says hold a distinct advantage. Affordability is a major source of demand, and it illustrates one benefit of buying an apartment rather than land. In 2024, the median price of a CBD apartment was 56 percent below that of a detached house, which puts apartments within reach of buyers chasing high rental yields.
The rental figures point the same direction. Median weekly rent in the CBD reached $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 help existing stock as well. Sites for new development inside the CBD grid are becoming 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 continues to outrun supply. Effective property portfolio diversification strategies, it adds, often begin with securing high-performing urban assets such as Melbourne CBD apartments.
The report’s conclusion is direct. 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.
Taken together, the figures describe a market where demand is running ahead of supply. What remains open is how quickly the pipeline can respond to a city expected to hold 7.45 million residents by 2040.
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