A city that keeps adding residents faster than it adds homes: that is the pressure running through every figure in this report on Melbourne’s central business district.
The City of Melbourne projects a need for 21,600 additional dwellings by 2028. Only 8,900 new apartments are currently in the pipeline, which leaves a 60% shortfall. For investors choosing between real estate investment trusts and direct property ownership, that structural gap underpins long-term capital appreciation and points to potential growth in both prices and rental returns.
Population is the engine behind the demand. Immigration has fueled steady expansion across Melbourne over the past decade, and 446,000 new overseas arrivals settled in the city in 2024 alone. Melbourne is on track to overtake Sydney as Australia’s largest city by 2032. The Melbourne CBD Market Outlook 2025 looks further out, forecasting a population of 7.45 million by 2040, a projection that anchors the argument for buying apartments in the downtown core.
Far East Consortium, one of Melbourne’s most respected property developers, commissioned that outlook and engaged Urbis to analyze how the city’s property market functions, what shapes buyer behavior, and how the economy may perform in 2025 and beyond. The advisor who shared the material has spent ten years guiding clients through Victoria’s real estate cycles and calls the present moment a rare opening for a strategic purchase. By that advisor’s assessment, Melbourne CBD remains one of the most attractive property markets in Australia, backed by a growing population, major infrastructure projects, and strong rental demand.
Price of entry adds to the appeal. Apartments cost less than detached houses, and in 2024 the median apartment price in the CBD ran 56% below the median house price. That gap makes apartments the more accessible route into the market.
Rental data points the same way. Median weekly rent hit $750 in November 2024, up from $690 in 2023, a 9% increase year-on-year. Vacancy stayed tight, averaging 2.4% through 2024, and newly built CBD apartments produced gross rental yields of 4.8%. Because the CBD grid has little room left for new development, existing apartments look positioned for significant capital growth. The Melbourne CBD Market Outlook 2025 states that “constraints on new supply should lead to growth in capital values as demand continues to outpace supply”. Investors can protect those yields from operational swings by securing comprehensive landlord insurance and carrying out thorough property management reviews.
Government spending strengthens the picture. Victoria has an infrastructure plan worth $107 billion, which raises Melbourne’s global profile and supports long-term property values. Five projects within it stand out.
First, the Melbourne Greenline, due in 2025, is a $224 million program to remake public spaces along the Yarra River. It will deliver a 4-kilometer route with expanded recreation and event options.
Also due in 2025, the West Gate Tunnel Project is a major road upgrade that gives drivers an alternative to the West Gate Bridge. It should reduce congestion and Improve connections between Melbourne’s west and the CBD.
Scheduled for 2028, the North East Link is the largest road project in Victoria’s history. It will join key arterial roads in Melbourne’s north and east, shorten travel times, and support urban growth across the region.
The Queen Victoria Market Renewal, set for 2029, is a $268 million revitalization of the city’s iconic market. New public spaces, restaurants, and activities are meant to draw residents and visitors alike.
Planned for 2035, the Suburban Rail Loop will connect key suburbs, shorten commutes, and lift housing demand near transport hubs such as Clayton and Sunshine. For investors pursuing commercial real estate loans or residential mortgages, properties near these transit corridors have consistently outperformed broader market averages.
The national economy provides the backdrop. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, a sign of economic resilience. Consumer confidence has also recovered: the ANZ-Roy Morgan Index rose 12 points year-on-year to 86.4 in December 2024. Inflation eased to 2.8% in September 2024. Taken together, these trends have produced a favorable climate for property investment.
Lending conditions may help as well. Major banks, including ANZ and NAB, forecast interest rate cuts that should reduce borrowing costs and stimulate activity in the property market. By December 2025, the Reserve Bank of Australia’s cash rate is expected to fall to between 3.35% and 3.85%, which would Improve affordability for investors using home loans or investment property loans.
The advisor’s conclusion is that rapid population growth, transformative infrastructure, and strong rental performance together make Melbourne CBD an exceptional investment opportunity, and that the scarcity of new development inside the CBD grid leaves existing apartments positioned for capital growth. Among the many factors to weigh when buying in Melbourne, location remains one of the most critical. The advisory team invites investors who want to capitalize on the market’s strength to get in touch, explore curated opportunities in Melbourne CBD apartments, and schedule a one-on-one portfolio consultation.
The data in this report frames a single question: how far the Imbalance between new residents and new homes will push prices and rents beyond 2025. Each prospective buyer will have to answer it for themselves.
If you want to stay current with reporting like this, hit subscribe and give the video a like. Turn on the notification bell as well, so the next story reaches your feed the moment it goes live.”
