A 60 percent supply shortfall, a $107 billion infrastructure plan, and a 9 percent jump in rents over twelve months: those three figures anchor the Melbourne CBD Market Outlook 2025.
Urbis prepared the study for the Far East Consortium, one of the city’s most respected developers. It examines how the market operates, what drives buyers, and where the economy is headed in 2025 and beyond. Based on what it found, the report places the Melbourne CBD among the strongest property markets in Australia.
Start with housing supply. The City of Melbourne estimates the city will need 21,600 additional dwellings by 2028. The existing apartment pipeline, however, contains just 8,900 new units, so supply trails requirements by 60 percent. The report reads that gap as a sign of considerable room for price growth and rental returns on CBD apartments.
On the demand side, population is the driver. Melbourne is on track to pass Sydney as Australia’s largest city by 2032, and projections put its population at 7.45 million by 2040. Immigration has fueled steady expansion over the last decade, with 446,000 new overseas arrivals in 2024 alone. The report stresses that anyone considering a real estate investment needs to grasp demographic shifts, since they are central to building long-term wealth through property.
The report describes the economy as the base layer. Unemployment stood at 4.0 percent in late 2024, comfortably under the 10-year average of 5.3 percent, a sign of a resilient national economy. Consumer confidence has bounced back strongly. The ANZ-Roy Morgan Index climbed 12 points year over year to 86.4 in December 2024. Inflation cooled to 2.8 percent in September 2024. Combined, these readings create a favorable climate for property investment and wealth management advisory services.
Lending conditions should ease too. Major banks, including ANZ and NAB, forecast rate cuts that would make credit cheaper and energize the property market. The Reserve Bank of Australia’s cash rate is expected to land between 3.35 percent and 3.85 percent by December 2025. That would further Improve affordability for investors who depend on mortgage broker services or commercial real estate loans.
Government spending adds yet another layer. A series of major projects is lifting Melbourne’s liveability and its profile as an investment destination, and the projects are scheduled to open at different points over the coming decade.
Two arrive in 2025. The Melbourne Greenline, a $224 million project, will transform public space along the Yarra River into a 4 km corridor offering more room for recreation and events. The West Gate Tunnel Project, a major road upgrade, will give motorists an alternative to the West Gate Bridge, relieving congestion and Improving connectivity between Melbourne’s west and the CBD.
The North East Link follows in 2028 as the largest road project in Victoria’s history. It connects key arterial roads in the city’s north and east, shortens travel times, and supports urban growth across the region. In 2029 comes the Queen Victoria Market Renewal, a $268 million revitalization of the city’s iconic market that will deliver new public spaces, restaurants, and activities for residents and visitors. The Suburban Rail Loop closes out the list in 2035. It will connect key suburbs and shorten commutes, and it is also expected to lift housing demand near transport hubs such as Clayton and Sunshine.
Every one of these projects falls under Victoria’s $107 billion infrastructure plan, which the report says strengthens Melbourne’s global appeal and drives long-term growth in property values. For astute investors, it notes, closeness to these transport networks correlates directly with higher tenant retention and sustainable capital appreciation.
Against that backdrop, the report turns to apartments, which it says have a distinct advantage. Affordability is a major source of demand and highlights one benefit of buying an apartment instead of land. In 2024, the median price of a CBD apartment sat 56 percent below that of a detached house, putting apartments within reach of buyers pursuing high rental yields.
Rental data point the same way. Median weekly rent in the CBD hit $750 in November 2024, compared with $690 in 2023, a 9 percent year-on-year increase. The vacancy rate averaged a low 2.4 percent across 2024, and newly built CBD apartments produced gross rental yields of 4.8 percent.
Scarcity may also benefit existing stock. Sites for new development inside the CBD grid are getting harder to find, so existing apartments are likely to see significant capital appreciation. The report states that limits on new supply should push capital values higher as demand keeps outrunning supply. Effective property portfolio diversification strategies, it adds, often start with securing high-performing urban assets such as Melbourne CBD apartments.
The report’s conclusion is blunt. Rapid population growth, transformative infrastructure, and strong rental performance make the Melbourne CBD an exceptional investment opportunity, and the shortage of new development inside the grid adds to its appeal. Buyers weigh many factors when purchasing in Melbourne, and location ranks among the most critical. Working with a qualified financial advisor or buyer’s agent helps keep a portfolio aligned with current macroeconomic shifts. For investors looking to capitalize on the strength of Melbourne’s market, the report says the time to act is now.
Put side by side, the numbers describe a market where demand is outpacing supply. The open question is how fast the pipeline can respond to a city expected to be home to 7.45 million residents by 2040.
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