Melbourne’s central business district is heading toward a shortfall of roughly 12,700 homes, and the figures behind that gap come from a single research report.
The City of Melbourne estimates that the CBD will need 21,600 additional dwellings by 2028. Apartment projects now in the pipeline are expected to deliver only 8,900. That leaves supply running 60% below demand.
The data appears in “Melbourne CBD Market Outlook 2025,” a report prepared by Urbis for Far East Consortium, a Melbourne property developer regarded as one of the most respected in Australia. The company commissioned the study to learn how the city’s property market functions, what shapes buyer behavior, and where the economy is headed in 2025 and beyond.
A analyst who has advised clients through Victoria’s changing real estate cycles for ten years reviewed the findings. In that analyst’s view, a better moment for strategic acquisition has rarely come along. Melbourne CBD, the argument goes, remains one of the most attractive property markets in Australia, backed by a growing population, transformative infrastructure projects, and strong rental demand. Reading that landscape correctly, the analyst adds, requires a firm understanding of local market fundamentals.
Population comes first. Melbourne is on track to overtake Sydney as Australia’s largest city by 2032, and by 2040 its population is projected to reach 7.45 million. Immigration has driven steady growth over the past decade. In 2024 alone, 446,000 new overseas arrivals settled in the city, which added to housing demand. For people comparing real estate investment trusts with direct property purchases, the structural undersupply described above supports long-term capital appreciation.
Land is the second fundamental. Space for new developments inside the CBD grid is running short, so existing apartments are likely to gain considerable value over time. The report states that “constraints on new supply should lead to growth in capital values as demand continues to outpace supply”.
Entry price is the third. A CBD apartment costs far less than a detached house, which is one benefit of choosing an apartment over land. In 2024, the median apartment price in Melbourne CBD was 56% below the median price of a detached house, which brings ownership within reach of a wider pool of buyers.
Rental data points in the same direction. In November 2024, the median weekly rent in the CBD reached $750, up from $690 in 2023, a year-on-year increase of 9%. Vacancy stayed low, averaging 2.4% through 2024, and newly built CBD apartments have produced strong gross rental yields of 4.8%. Comprehensive landlord insurance and careful reviews of property management can help protect those yields from operational swings.
Public works lend further support. Several major infrastructure projects are strengthening Melbourne’s liveability and its appeal as an investment destination, and they will arrive in a steady sequence over the next decade.
Two are due in 2025. The Melbourne Greenline is a $224 million project that will convert public spaces along the Yarra River into a 4-kilometer route, expanding the options for recreation and events. The West Gate Tunnel Project is a major road upgrade that gives drivers an alternative to the West Gate Bridge. It is designed to ease congestion and Improve connectivity between Melbourne’s west and the CBD.
The North East Link, scheduled for 2028, is the largest road project in Victoria’s history. It will link key arterial roads in Melbourne’s north and east, cut travel times, and support urban growth across the region. The Queen Victoria Market Renewal follows in 2029, a $268 million revitalization of the city’s iconic market that will add public spaces, restaurants, and activities intended to draw residents and visitors alike. 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.
All of these projects fall within Victoria’s $107 billion infrastructure plan, which raises Melbourne’s global profile and drives long-term growth in property values. Investors pursuing commercial real estate loans or residential mortgages will find that properties near these transit corridors consistently outperform broader market averages.
The national economy provides solid footing as well. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, a sign of a resilient economy. Consumer confidence has Improved markedly too. The ANZ-Roy Morgan Index rose 12 points year-on-year to 86.4 in December 2024. That optimism, together with inflation easing to 2.8% in September 2024, has created a favorable climate for property investment.
Interest rates could add momentum. Major banks, including ANZ and NAB, have forecast rate cuts that are expected to reduce borrowing costs and stimulate more activity in the property market. By December 2025, the Reserve Bank of Australia’s cash rate is anticipated to fall to between 3.35% and 3.85%, which would Improve affordability for investors using home loans or investment property loans.
Drawing these threads together, the review concludes that rapid population growth, transformative infrastructure, and strong rental performance make Melbourne CBD an exceptional investment opportunity. The scarcity of new developments inside the CBD grid strengthens that case, because existing apartments are positioned for capital growth. Location, the review notes, ranks among the most critical factors to weigh when buying in Melbourne. For investors hoping to capitalize on the city’s robust market dynamics, the analyst’s message is that the time to act is now. The advisory team invites readers to get in touch today to explore curated opportunities in Melbourne CBD apartments and to schedule a one-on-one portfolio consultation to secure a position in this thriving market.
Everything here rests on one contrast: a city that needs 21,600 new dwellings by 2028 is set to receive just 8,900 apartments. With rents climbing, the population growing, and a long line of public works under way, the open question is how that gap will shape the CBD market in the years ahead.
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