Melbourne is projected to pass Sydney as Australia’s largest city by 2032, and to reach a population of 7.
45 million by 2040. Those forecasts come from the “Melbourne CBD Market Outlook 2025,” a report prepared by Urbis for Far East Consortium, a Melbourne developer regarded as one of the most respected in Australia. The company wanted a clearer picture of how the local property market operates, what shapes the behavior of buyers, and where the economy is likely to head in 2025 and the years beyond.
The report’s central figures concern supply. By 2028, the City of Melbourne is estimated to need roughly 21,600 more dwellings, yet only 8,900 new apartments are expected to be delivered in that time. The result is a shortfall of nearly 60%, and that gap is the foundation of the argument for buying property in the central business district.
An analyst with ten years in the local real estate sector interprets the findings. A decade in the field has let him watch several market cycles rise and fall. He calls the data compelling and highly actionable for investors interested in commercial real estate finance and high-yield residential assets. In his assessment, Melbourne has evolved from a lively cultural hub into a powerhouse of wealth generation. He points to three forces behind that shift: a growing population, major infrastructure projects, and strong rental demand. Together, he says, they provide long-term security and capital appreciation.
Population growth, driven mainly by Immigration, sits behind the demand side of the shortage. In 2024 alone, 446,000 new overseas arrivals settled in the city. That inflow added considerably to housing demand and shifted the affordability baseline across inner-city suburbs. The author treats this pressure as a sign of potential price growth and strong rental returns in the CBD. He also contends that buying in an undersupplied urban core is among the most dependable hedges against inflation, as well as a reliable route to predictable cash flow.
Government spending is the second pillar of his case. Victoria has committed to an infrastructure program worth $107 billion. The author credits it with Improving Melbourne’s liveability, strengthening its global appeal, and driving long-term growth in property values. Five projects anchor the program, each with its own completion date.
Two arrive in 2025. The first is the Melbourne Greenline, a $224 million project that will reshape public spaces along the Yarra River. It will open a 4 kilometer route with more space for recreation and events, which the author says lifts the value of nearby residential property. The second is the West Gate Tunnel Project, a major road upgrade that offers drivers an alternative to the West Gate Bridge. It is intended to ease congestion and strengthen the connection between Melbourne’s west and the CBD.
The North East Link follows in 2028. It is the largest road project in Victoria’s history, and it will join key arterial roads in the city’s north and east, cut travel times, and support urban growth across that part of Melbourne. In 2029, the $268 million Queen Victoria Market Renewal is scheduled to give the iconic market new public spaces, restaurants, and activities for residents and visitors alike. The last project on the list is the Suburban Rail Loop, due in 2035. It will link key suburbs, shorten commutes, and increase housing demand around transport hubs such as Clayton and Sunshine.
Viewing the five projects from a wealth advisory perspective, the author concludes that real estate near state-backed infrastructure supports steady tenant demand and protects capital when the economy shifts.
Price is another factor in the argument. Apartments in the CBD cost far less than detached houses, and the author names that difference as one of the main advantages of buying an apartment rather than land. In 2024, the median apartment price in the CBD was 56% below the median for a detached house. That makes apartments a much more accessible choice for first-time buyers and institutional investors alike.
The rental data runs in the same direction. Median weekly rent in the CBD climbed to $750 in November 2024, from $690 in 2023, a rise of 9% year over year. Vacancy remained remarkably low, averaging 2.4% across 2024. Newly built apartments in the CBD have produced gross rental yields of 4.8%, which strengthens their appeal for investors looking for passive income through strategic acquisitions.
Land is also running out. The CBD grid is nearly full, and the report says these supply constraints should deliver consistent growth in capital values, since demand continues to outpace supply by a comfortable margin. It follows, the author says, that existing apartments are likely to see significant capital appreciation. He adds that for investors who study historical trends, scarcity in prime locations has always produced superior mid-to-long-term returns.
The broader economy provides firm footing as well, including for leveraged investments and mortgage refinancing strategies. Unemployment stood at 4.0% in late 2024, well under the 10-year average of 5.3%, which the author reads as proof of a resilient labor market and robust corporate health. Consumer confidence has recovered, with the ANZ-Roy Morgan Index rising 12 points year over year to 86.4 in December 2024. Inflation eased to 2.8% in September 2024. Taken together, the author says, these readings create a highly favorable setting for property investment and wealth accumulation.
Interest rates may add further momentum. Major banking institutions, including ANZ and NAB, forecast rate cuts that should lower borrowing costs and stimulate more activity in the residential market. By December 2025, the Reserve Bank of Australia’s cash rate is expected to fall to between 3.35% and 3.85%, a move that would Improve affordability and borrowing capacity for investors entering the market.
Weighing every factor, the author regards Melbourne’s CBD as an exceptional opportunity. Rapid population growth, transformative infrastructure, and strong rental performance combine with scarce new development inside the CBD grid. That scarcity, he says, leaves existing apartments well positioned for sustained capital growth. He still stresses that a diversified portfolio requires a clear strategy and a firm grasp of local market fundamentals, and he advises consulting a qualified property expert or financial advisor before making any commitment.
Everything in the report comes back to two numbers: 21,600 dwellings needed and 8,900 apartments on the way. How the city responds to the distance between them will shape the next chapter for Melbourne’s CBD, and it is the figure investors will keep revisiting as 2028 draws closer.
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