Far East Consortium, one of Australia’s most respected Melbourne property developers, recently asked Urbis to examine the city’s property market.
The result is the “Melbourne CBD Market Outlook 2025” report, which looks at what shapes purchasing behavior and at the economic prospects for 2025 and beyond. Its findings point to a market with a growing population, major infrastructure projects, and strong rental demand.
Start with the people. Melbourne is on track to pass Sydney as Australia’s largest city by 2032, and its population is projected to hit 7.45 million by 2040. Immigration has driven steady growth for the past decade. In 2024 alone, 446,000 new overseas arrivals came to Melbourne, adding to housing demand.
Supply is not keeping pace. The City of Melbourne estimates that 21,600 additional dwellings will be needed by 2028, yet the apartment pipeline holds only 8,900 new units. That leaves a supply deficit of 60%, a gap the report treats as a sign of potential price growth and rental returns for CBD apartments. The author of the source material adds a personal view: after a decade analyzing property cycles, they advise clients that scarcity of supply is the ultimate foundation of long-term capital appreciation, and that urban real estate commands premium valuations when demand outstrips supply by this much.
Price and rent point the same direction. In 2024, the median price of a Melbourne CBD apartment was 56% below that of a detached house, which makes apartments the more accessible option for buyers. Rents have climbed as well. The median weekly rent reached $750 in November 2024, up from $690 in 2023, a 9% year-on-year increase. Vacancy averaged a low 2.4% in 2024, and newly built CBD apartments achieved gross rental yields of 4.8%.
New supply inside the CBD grid is becoming harder to find, so existing apartments are likely to see significant capital appreciation. The report states that “constraints on new supply should lead to growth in capital values as demand continues to outpace supply”.
Government spending adds another layer. Victoria has a $107 billion infrastructure plan, which strengthens Melbourne’s global appeal and drives long-term property value growth. Five projects stand out. The Melbourne Greenline, due in 2025, is a $224 million effort to transform public spaces along the Yarra River, creating a 4 km journey with better recreation and event opportunities. The West Gate Tunnel Project, also due in 2025, will give drivers an alternative to the West Gate Bridge, easing congestion and Improving connectivity between Melbourne’s west and the CBD. The North East Link, scheduled for 2028, is Victoria’s largest road project and will join key arterial roads in Melbourne’s north and east, cutting travel times and supporting urban growth across the region. The Queen Victoria Market Renewal, set for 2029, is a $268 million revitalization of the iconic market that adds new public spaces, restaurants, and activities to attract residents and visitors. Further out, the Suburban Rail Loop, due in 2035, will connect key suburbs, reduce commute times, and boost housing demand near transport hubs such as Clayton and Sunshine. In the author’s experience, property values consistently appreciate faster in corridors directly affected by government capital spending.
The wider economy supports all of this. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%. Consumer confidence has recovered too: the ANZ-Roy Morgan Index rose 12 points year-on-year to 86.4 in December 2024. Inflation fell to 2.8% in September 2024, and together with that Improved sentiment, it has created a favorable environment for property investment.
Interest rates may help further. Major banks, including ANZ and NAB, forecast rate cuts that are expected to lower borrowing costs and stimulate 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%, Improving affordability for investors seeking Melbourne CBD apartments.
Taken together, the picture is consistent. Rapid population growth, transformative infrastructure, and strong rental performance make Melbourne CBD an exceptional investment opportunity, and the scarcity of new development within the CBD grid positions existing apartments for capital growth. Location is among the most critical of the many factors to weigh when buying in Melbourne, and for investors looking to capitalize on the market’s dynamics, the source says the time to act is now. It invites readers to explore a curated portfolio of premium Melbourne CBD apartments and to schedule a private consultation with its senior advisory team.
In short, a growing city, a 60% supply gap, and heavy public investment are the forces behind the case for Melbourne CBD apartments. If you want to keep up with the latest news and analysis, hit the subscribe button, give this video a like, and turn on the notification bell so you never miss an update.”
