Melbourne is gaining people faster than it is building places for them to live.
That mismatch drives a new report on the city’s central business district, and one number captures it: 60%.
The study is titled the “Melbourne CBD Market Outlook 2025.” Urbis prepared it for Far East Consortium, one of Australia’s most respected Melbourne property developers, which commissioned the work to lay out how the city’s property market operates. The report covers what shapes buyer behavior, where the structural housing shortage sits, and which wider economic forces are lifting Melbourne real estate.
Start with the shortfall. The City of Melbourne estimates that the city will need 21,600 additional dwellings by 2028. Only 8,900 new apartments are projected to be completed over the same stretch. Urbis reads that distance between need and delivery as a sign of potential for sustained price growth and solid rental returns on CBD apartments. According to the report, a shortage paired with rising population pressure is exactly what experienced buyers look for when they build high-yield portfolios. Its overall verdict is direct: rapid population growth, major infrastructure projects, and strong rental demand make Melbourne CBD one of the country’s most attractive property markets for investors pursuing long-term capital appreciation and sustainable wealth creation.
The population numbers explain the pressure. Urbis projects that Melbourne will pass Sydney as Australia’s largest city by 2032 and reach a population of 7.45 million by 2040. Growth has remained strong for ten years, fueled mainly by international Immigration and by people relocating from other states. In 2024 alone, 446,000 new overseas arrivals settled in Melbourne.
Construction is changing the city while that demand builds. The report ties a series of infrastructure projects to Melbourne’s liveability, economic resilience, and lasting appeal for investors. Two are scheduled for 2025. The Melbourne Greenline, a $224 million project, turns public spaces along the Yarra River into a scenic 4 km route, creating new openings for recreation, lifestyle, and commercial events. The West Gate Tunnel Project gives drivers a dependable alternative to the heavily congested West Gate Bridge. It also Improves freight movement and logistical links between Melbourne’s western industrial corridors and the CBD.
The North East Link comes due in 2028. Victoria’s largest integrated road engineering project, it joins key arterial routes across Melbourne’s north and east, cuts travel times, and supports coordinated urban growth across the region. In 2029, the Queen Victoria Market Renewal is expected to deliver a $268 million revitalization of one of the city’s iconic cultural hubs. New public plazas, dining districts, and community activities are intended to draw permanent residents and international tourists alike.
The most distant project is the Suburban Rail Loop, targeted for 2035. This multi-billion-dollar rail initiative connects key middle-ring suburbs and shortens commutes. It is also expected to generate heavy housing demand near high-density transport hubs such as Clayton and Sunshine. Together, these projects form the backbone of Victoria’s $107 billion infrastructure pipeline, which lifts Melbourne’s global competitiveness and directly supports long-term property value growth. For strategic investors, the report says, buying near major infrastructure nodes is a proven route to above-average capital gains.
Price helps explain why apartments in particular attract so much attention. Affordability limits in traditional housing markets have changed how buyers think, and CBD apartments cost far less than detached suburban homes. In 2024, the median apartment price in Melbourne CBD sat roughly 56% below the median for a detached house. High-rise units therefore give first-time buyers and institutional investors a much more accessible entry point, and they show one of the core financial advantages of an apartment over standalone land.
Rents point the same direction. Inner-city rents rose over the same period, with the median weekly rent reaching $750 in late 2024, up from $690 a year earlier. That is a 9% year-on-year increase. Vacancy rates average about 2.4%, a sign of tight conditions. Newly built CBD apartments have consistently delivered gross rental yields of 4.8%, a figure that supports their cash flow appeal in an inflationary climate.
Limited supply also strengthens the outlook for existing apartments. Chances for new development inside the tightly held CBD grid are growing scarcer, which positions existing apartments for faster capital appreciation. The report notes that strict regulatory and geographical limits on new supply will push capital values higher, because rental and buyer demand is outrunning available inventory.
The broader economy offers another cushion. Macroeconomic indicators shape the health of commercial and residential property alike, and Australia’s fundamentals remain resilient. Unemployment holds steady at 4.0%, comfortably below its 10-year historical average of 5.3%, which points to a robust labor market. Consumer confidence has recovered as well. The ANZ-Roy Morgan Index gained 12 points year-on-year to reach 86.4, reflecting Improved sentiment among households and business owners. With inflation cooling to 2.8%, conditions have become more favorable for property purchases and leveraged wealth building.
Monetary policy may add support. Major financial institutions, including ANZ and NAB, anticipate policy easing, which is expected to lower borrowing costs and bring fresh liquidity into the residential market. The Reserve Bank of Australia’s cash rate is projected to ease toward a range of 3.35% to 3.85%, which would expand purchasing power and lower hurdles for active market participants.
Pulling these threads together, the report presents Melbourne CBD as a place where rapid demographic expansion, generational infrastructure spending, and resilient rental performance converge, a combination that positions it as an elite asset class for focused investors. The acute scarcity of new developments within the central business district grid reinforces its long-term characteristics, helping well-located residential assets stay insulated from oversupply risk while capturing steady upside. Choosing the right asset in the right pocket matters, and the report recommends consulting a qualified property strategist or financial advisor before committing capital.
Set the individual forecasts aside, and the Urbis findings come down to a single fact: Melbourne’s population and renter base are growing faster than its housing stock, leaving a 60% gap between the 21,600 dwellings needed by 2028 and the 8,900 apartments on the way. Whether that gap turns into lasting gains for buyers is a question each investor must weigh with professional guidance.
If this breakdown was useful, hit subscribe so the next report finds its way to you. A like on the video helps more people see it, and turning on the notification bell means the latest news reaches you as soon as it is published.”
