Melbourne is forecast to overtake Sydney as Australia’s largest city by 2032, and its population is projected to reach 7.
45 million by 2040. That growth is one of four converging trends laid out in a report commissioned by Far East Consortium, one of Australia’s most respected Melbourne property developers. The company engaged Urbis to produce the “Melbourne CBD Market Outlook 2025,” a study meant to show how the city’s property market works, what shapes buyer behavior, and what the economy may deliver in 2025 and beyond. The report concludes that the CBD ranks among the strongest property markets in the country.
The piece behind this summary was written by an author with ten years of experience guiding clients through Victoria’s real estate cycles. He says he has rarely seen a better window for strategic acquisition, and he urges buyers to learn local market fundamentals before anything else.
Start with population. Immigration has driven steady growth over the past decade, and in 2024 alone, 446,000 new overseas arrivals settled in Melbourne, adding to housing demand.
Housing supply is not keeping up. According to the City of Melbourne, the city will need 21,600 additional dwellings by 2028, yet the current apartment pipeline holds only 8,900 new units. That is a 60% shortfall. For anyone weighing real estate investment trusts or direct property purchases, this structural undersupply underpins long-term capital appreciation. Space for new construction inside the CBD grid is shrinking as well, so existing apartments are likely to see significant capital appreciation. The report states, “constraints on new supply should lead to growth in capital values as demand continues to outpace supply”.
The rental market shows that demand at work. Median weekly rent in the CBD reached $750 in November 2024, up from $690 in 2023, a 9% year-on-year rise. A low vacancy rate, averaging 2.4% in 2024, supported the increase. Newly built CBD apartments produced gross rental yields of 4.8%, which adds to their appeal for investors. Comprehensive landlord insurance and thorough property management reviews can shield those yields from operational swings.
Price is another factor. In 2024, the median price of a Melbourne CBD apartment sat 56% below that of a detached house. Buyers therefore get a more accessible entry point, and the lower cost is one benefit of choosing an apartment over land.
The second pillar is public spending. Victoria has a $107 billion infrastructure plan, which raises Melbourne’s global profile and supports long-term property values. Five projects stand out, listed here in order of completion.
The Melbourne Greenline, due in 2025, is a $224 million effort to convert public space along the Yarra River into a 4-kilometer corridor with more recreation and event opportunities. Also due in 2025, the West Gate Tunnel Project is a major road upgrade that will give drivers an alternative to the West Gate Bridge. It should ease congestion and Improve connectivity between Melbourne’s west and the CBD. The North East Link, scheduled for 2028, is Victoria’s largest road project. It will join key arterial roads in the city’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 iconic market, with new public spaces, restaurants, and activities intended to draw residents and visitors. 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. For investors seeking commercial real estate loans or residential mortgages, properties near these transit corridors consistently outperform broader market averages.
The wider economy offers support too. At the end of 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, a sign of economic resilience. Consumer confidence Improved markedly, with the ANZ-Roy Morgan Index climbing 12 points year-on-year to 86.4 in December 2024. Inflation also eased, falling to 2.8% in September 2024. Together, these trends create a favorable climate for property investment.
Interest rates may add momentum. Major banks, including ANZ and NAB, forecast rate cuts that should lower borrowing costs and stimulate 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%, Improving affordability for investors using home loans or investment property loans.
Put together, rapid population growth, transformative infrastructure, and strong rental performance give the Melbourne CBD a rare combination. Scarce new development inside the CBD grid leaves existing apartments positioned for capital growth. Location remains among the most critical of the many factors in buying in Melbourne. For investors who want to capitalize on the market, the original author advises acting now, contacting the advisory team to explore curated opportunities in Melbourne CBD apartments, and scheduling a one-on-one portfolio consultation.
In short, a growing population, a thin apartment pipeline, heavy public investment, and solid economic indicators all point the same way. The open question is how fast new construction can narrow a gap of 60% between what Melbourne needs and what is being built.
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