That is the gap between the 21,600 dwellings the City of Melbourne says it needs by 2028 and the 8,900 apartments currently in the pipeline.
The document is the Melbourne CBD Market Outlook 2025. Far East Consortium, which the report calls one of Australia’s most respected Melbourne property developers, commissioned it, and the firm Urbis wrote it. Its stated aim is to explain how Melbourne’s property market works, what shapes buyers’ decisions, and what the economy looks like for 2025 and beyond. The argument rests on four drivers for buying apartments in the central business district, or CBD: population growth, public investment, rental demand, and a stable national economy. The report cautions that weighing the opportunity properly requires a solid grasp of local market fundamentals, financial planning, and broader economic trends.
Start with population. Melbourne is forecast to reach 7.45 million residents by 2040, and it is projected to overtake Sydney by 2032 as Australia’s largest city. Immigration has driven the growth for a decade. In 2024 alone, 446,000 new overseas arrivals came to Melbourne, and housing has felt the pressure. Measured against the City of Melbourne’s estimate of 21,600 needed dwellings by 2028, the 8,900 apartments in the pipeline fall well short of half. The report reads that gap as evidence of considerable room for price growth and rental returns on CBD apartments, and it adds that anyone building long-term wealth through property must understand demographic shifts.
The second driver is public investment, and the report names five projects it says are raising Melbourne’s liveability and its standing with investors. The Melbourne Greenline, due in 2025, is a $224 million project that will reshape public spaces along the Yarra River and create a 4-kilometer route with more recreation and event opportunities. Also due in 2025 is the West Gate Tunnel Project, a major road upgrade that gives drivers an alternative to the West Gate Bridge, eases congestion, and Improves links between Melbourne’s west and the CBD. The North East Link, planned for 2028, is the largest road project in Victoria’s history. It will connect key arterial roads across Melbourne’s north and east, cut travel times, and support urban growth throughout the region. In 2029 comes the Queen Victoria Market Renewal, a $268 million revitalization of one of the city’s best-known landmarks, with new public spaces, restaurants, and activities meant to attract residents and visitors alike. The fifth is the Suburban Rail Loop, slated for 2035, which will link key suburbs and shorten commutes. It is also expected to lift housing demand around transport hubs such as Clayton and Sunshine.
All five fall within Victoria’s $107 billion infrastructure plan. According to the report, that plan strengthens Melbourne’s global appeal and pushes long-term property values higher. It says discerning investors will find that proximity to these transport networks goes hand in hand with stronger tenant retention and sustainable capital appreciation.
Next, the report explains why apartments stand out, beginning with price. In 2024, the median price of a CBD apartment sat 56% below the median for a detached house. That difference opens the market to buyers chasing high rental yields, and the report presents it as one advantage of buying an apartment rather than land.
Rental demand, the third driver, points the same direction. Median weekly rent in the CBD reached $750 in November 2024, up from $690 in 2023, a 9% rise over the year. Vacancy stayed tight, averaging 2.4% across 2024. Newly built CBD apartments delivered gross rental yields of 4.8%, which the report counts as another draw for investors.
Supply is the flip side of that demand. Land available for new development inside the CBD grid is running short, so the report expects existing apartments to see significant capital appreciation. It notes that limits on new supply should lift capital values for as long as demand outpaces availability. It also observes that effective portfolio diversification strategies often begin with securing high-performing urban assets, and it names Melbourne CBD apartments as one such example.
The fourth driver is the national economy, where the report finds strong fundamentals underpinning Melbourne’s market. Unemployment stood at 4.0% in late 2024, well below the 10-year average of 5.3%, which the report takes as a sign of resilience. Consumer confidence has rebounded too: the ANZ-Roy Morgan Index climbed 12 points year over year to 86.4 in December 2024. Inflation eased to 2.8% in September 2024. In the report’s account, better sentiment combined with cooling prices has produced a favorable climate for property investment and for wealth management advisory services.
Interest rates are expected to add further support. Major banks, including ANZ and NAB, forecast rate cuts that should lower borrowing costs and stimulate activity in the property market. The Reserve Bank of Australia’s cash rate is expected to fall to between 3.35% and 3.85% by December 2025. The report says that would Improve affordability even more for investors who rely on mortgage broker services or commercial real estate loans.
Pulling these threads together, the report describes the Melbourne CBD as offering a rare mix of rapid population growth, transformative infrastructure, and strong rental performance, and it calls the result an exceptional investment opportunity. The scarcity of new development land inside the CBD grid reinforces the case, since existing apartments are positioned for capital growth. The report acknowledges that buyers in Melbourne face many considerations, with the right location among the most critical. It recommends working with a qualified financial advisor or buyer’s agent so a portfolio keeps pace with current macroeconomic shifts. For investors who want to capitalize on the market’s strength, its message is that the time to act is now, and it suggests scheduling a consultation with a certified wealth management expert to explore prime Melbourne CBD apartments.
Each pillar of that argument stands on a figure: 446,000 arrivals, a 60% housing shortfall, a 9% jump in rents, and a $107 billion infrastructure plan, all feeding a city expected to pass 7.45 million people by 2040. That is the full case for the CBD, as presented by the developer that commissioned the report.
If this breakdown was useful to you, subscribe to the channel and hit the like button. Switch on the notification bell as well, so the next report or news update shows up in your feed the moment it goes live.”
