Start with the gap between what Melbourne needs and what it is building.
The City of Melbourne estimates the city will require 21,600 additional dwellings by 2028, yet only 8,900 new apartments are in the pipeline. That leaves a supply deficit of 60%. For investors weighing real estate investment trusts against direct property purchases, this structural shortfall is the foundation of long-term capital appreciation, and it signals potential for both price growth and rental returns.
People are behind that demand. Immigration has driven steady growth across Melbourne over the past decade, and 446,000 new overseas arrivals settled in the city in 2024 alone. By 2032, Melbourne is on track to pass Sydney as the largest city in Australia. The Melbourne CBD Market Outlook 2025 pushes the forecast further, projecting a population of 7.45 million by 2040, and that projection anchors the case for buying apartments in the downtown core.
Far East Consortium, among Melbourne’s most respected property developers, commissioned the report. It brought in Urbis to examine how the city’s property market works, what drives buyer behavior, and how the economy may look in 2025 and beyond. The advisor who shared this material has spent ten years guiding clients through Victoria’s real estate cycles, and describes the current moment as a rare opening for a strategic purchase. In that advisor’s assessment, Melbourne CBD remains one of the most attractive property markets in the country, supported by a growing population, major infrastructure projects, and strong rental demand.
Cost of entry is the next draw. Apartments sell for less than detached houses, and in 2024 the median apartment price in the CBD sat 56% below the median house price. That difference makes apartments the more accessible way into the market.
Rents are moving in the same direction. Median weekly rent reached $750 in November 2024, compared with $690 in 2023, a 9% rise year-on-year. Vacancy stayed tight, averaging 2.4% across 2024, and newly built CBD apartments delivered gross rental yields of 4.8%. Because room for new development inside the CBD grid is running out, existing apartments appear set for significant capital growth. The Melbourne CBD Market Outlook 2025 states that “constraints on new supply should lead to growth in capital values as demand continues to outpace supply”. Investors can shield those yields from operational swings by securing comprehensive landlord insurance and conducting thorough property management reviews.
Public spending reinforces the picture. Victoria has an infrastructure plan worth $107 billion, which raises Melbourne’s global profile and underpins long-term property values. Five projects within the plan stand out.
The Melbourne Greenline, due in 2025, is a $224 million effort to reshape public spaces along the Yarra River. It will create a 4-kilometer route with expanded recreation and event options.
Also due in 2025, the West Gate Tunnel Project is a major road upgrade that gives drivers an alternative to the West Gate Bridge. It should ease congestion and Improve links between Melbourne’s west and the CBD.
The North East Link, scheduled for 2028, is Victoria’s largest road project. It will connect key arterial roads in Melbourne’s north and east, cut travel times, and support urban growth across the region.
The Queen Victoria Market Renewal, set for 2029, is a $268 million revitalization of the city’s iconic market. New public spaces, restaurants, and activities are designed to attract residents and visitors alike.
The Suburban Rail Loop, planned for 2035, will link key suburbs, shorten commutes, and boost housing demand near transport hubs such as Clayton and Sunshine. For investors pursuing commercial real estate loans or residential mortgages, properties close to these transit corridors have consistently outperformed broader market averages.
The national economy provides the backdrop. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, a sign of economic resilience. Consumer confidence has recovered as well: the ANZ-Roy Morgan Index climbed 12 points year-on-year to reach 86.4 in December 2024. Inflation eased to 2.8% in September 2024. Together, these trends have created a favorable climate for property investment.
Lending conditions may add further support. Major banks, including ANZ and NAB, forecast interest 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.
In the advisor’s view, rapid population growth, transformative infrastructure, and strong rental performance combine to make Melbourne CBD an exceptional investment opportunity, and the scarcity of new development inside the CBD grid leaves existing apartments positioned for capital growth. Of the many factors to weigh when buying in Melbourne, location remains one of the most critical. Investors who want to capitalize on the market’s strength are invited by the advisory team to get in touch, explore curated opportunities in Melbourne CBD apartments, and schedule a one-on-one portfolio consultation.
Every number in this report traces back to the same pressure point: a city adding residents faster than it adds homes. How far that pressure carries prices and rents beyond 2025 is a question the data frames, and each prospective buyer will have to answer for themselves.
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