Twenty-one thousand six hundred homes needed.
Eight thousand nine hundred apartments coming. That single mismatch, projected for 2028 in the City of Melbourne, sits at the center of a bullish case for the city’s central business district.
The man making it has spent ten years in Melbourne real estate and has seen several market cycles come and go. In his view, the city has moved past its reputation as a lively cultural hub and become a powerhouse of wealth generation. He calls the latest data compelling and highly actionable for investors weighing commercial real estate finance or high-yield residential assets. Three forces carry his argument: a growing population, major infrastructure projects, and strong rental demand. Together, he says, they offer long-term security and capital appreciation.
His numbers come from the “Melbourne CBD Market Outlook 2025,” a report prepared by Urbis for Far East Consortium. The developer is regarded as one of the most respected in Australia, and it commissioned the study to better understand how the local property market works, what drives buyer behavior, and where the economy is likely to head in 2025 and beyond.
Start with the shortfall. By 2028, the City of Melbourne is estimated to need roughly 21,600 additional dwellings, yet only 8,900 new apartments are expected to be delivered in that window. That leaves a gap of nearly 60%, and the analyst treats it as the foundation for buying in the CBD.
Population growth explains much of the pressure. Melbourne is projected to overtake Sydney as Australia’s largest city by 2032 and to reach 7.45 million residents by 2040. Immigration is the main engine: 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 reads this as a sign of potential price growth and strong rental returns in the CBD. He also argues that buying in an undersupplied urban core is among the most dependable hedges against inflation, and a reliable path to predictable cash flow.
Price is another piece. 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 instead of land. In 2024, the median apartment price in the CBD was 56% below the median for a detached house, which makes apartments a much more accessible option for first-time buyers and institutional investors alike.
Rents tell a matching story. Median weekly rent in the CBD hit $750 in November 2024, compared with $690 in 2023, a 9% increase year over year. Vacancy stayed remarkably low, averaging 2.4% across 2024. Newly built CBD apartments have delivered gross rental yields of 4.8%, which strengthens their appeal for investors seeking passive income through strategic acquisitions.
Land is scarce, too. The CBD grid is nearly full, and the report says those supply constraints should produce consistent growth in capital values, because demand keeps outrunning supply by a comfortable margin. From this, the author concludes 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 supplies firm footing as well, including for leveraged investments and mortgage refinancing strategies. Unemployment was 4.0% in late 2024, well under the 10-year average of 5.3%, which the author takes as proof of a resilient labor market and robust corporate health. Consumer confidence has recovered: the ANZ-Roy Morgan Index rose 12 points year over year to 86.4 in December 2024. Inflation eased to 2.8% in September 2024. In his reading, these figures combine into a highly favorable setting for property investment and wealth accumulation.
Interest rates could add 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%. That would Improve affordability and borrowing capacity for investors entering the market.
The second pillar of his argument is government spending. Victoria has committed to an infrastructure program worth $107 billion, which he credits with Improving Melbourne’s liveability, strengthening its global appeal, and driving long-term growth in property values. Five projects anchor the program, each on its own timeline.
Two are due in 2025. The Melbourne Greenline, a $224 million project, will reshape public spaces along the Yarra River and open a 4 kilometer route with more room for recreation and events; the author says that lifts the value of nearby residential property. The West Gate Tunnel Project, a major road upgrade, gives drivers an alternative to the West Gate Bridge. It is meant to ease congestion and strengthen the link between Melbourne’s west and the CBD.
The North East Link arrives in 2028 as the largest road project in Victoria’s history. It will connect key arterial roads in the city’s north and east, cut travel times, and support urban growth across that part of Melbourne. In 2029 comes the $268 million Queen Victoria Market Renewal, which will give the iconic market new public spaces, restaurants, and activities for residents and visitors. The Suburban Rail Loop, due in 2035, closes out the list. It will connect key suburbs, shorten commutes, and increase housing demand around transport hubs such as Clayton and Sunshine.
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.
Weighing every factor, he regards Melbourne’s CBD as an exceptional opportunity. Rapid population growth, transformative infrastructure, and strong rental performance meet scarce new development inside the CBD grid, and 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.
The report’s whole argument, then, comes down to one comparison: a city that needs 21,600 dwellings by 2028 and expects just 8,900 apartments to be delivered. How that gap is handled will shape what comes next for Melbourne’s CBD, and it leaves a question worth watching as the decade moves on.
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