Melbourne is projected to overtake Sydney by 2032 and become Australia’s largest city.
By 2040, its population is forecast to reach 7.45 million. Those projections appear in the Melbourne CBD Market Outlook 2025, a report that builds a broader case for investing in apartments in the city’s central business district, or CBD, in 2025 and beyond. The argument stands on four pillars: fast population growth, major public works, strong rental demand, and a stable national economy. Weighing it properly calls for a solid grasp of local market fundamentals, financial planning, and wider economic trends.
Far East Consortium, described as one of Australia’s most respected Melbourne property developers, commissioned the report. The company hired the firm Urbis to produce it, with the aim of better understanding how Melbourne’s property market works, what shapes buyers’ decisions, and what the economic outlook looks like for 2025 and the years after.
Population comes first. Immigration has driven consistently strong growth in Melbourne over the past decade. In 2024 alone, the city took in 446,000 new overseas arrivals, adding to the pressure on housing. The City of Melbourne estimates it will need 21,600 additional dwellings by 2028, yet the apartment pipeline is expected to deliver just 8,900 new apartments. That is a supply deficit of 60%. According to the report, the mismatch between what is needed and what is being built signals considerable potential for price growth and rental returns on CBD apartments. It also stresses that anyone hoping to build long-term wealth through property needs to understand demographic shifts.
The second pillar is public investment. Large infrastructure projects are Improving Melbourne’s liveability while raising its profile with investors. Five stand out.
The Melbourne Greenline, scheduled for 2025, is a $224 million project that will reshape public spaces along the Yarra River and create a 4-kilometer route with more recreation and event opportunities.
The West Gate Tunnel Project, due in 2025, is a major road upgrade that will give drivers an alternative to the West Gate Bridge. It is meant to ease congestion and Improve links between Melbourne’s west and the CBD.
The North East Link, planned for 2028, is the largest road project in Victoria’s history. It will connect key arterial roads across Melbourne’s north and east, shorten travel times, and support urban growth throughout the region.
The Queen Victoria Market Renewal, set for 2029, is a $268 million revitalization of one of the city’s best-known landmarks. It will add new public spaces, restaurants, and activities designed to attract residents and visitors alike.
The Suburban Rail Loop, slated for 2035, is a rail project that will link key suburbs and cut commute times. It is also expected to lift housing demand near transport hubs such as Clayton and Sunshine.
All five projects fall under Victoria’s $107 billion infrastructure plan. The report says that plan strengthens Melbourne’s global appeal and pushes long-term property values higher. For discerning investors, it adds, living close to these transport networks goes hand in hand with stronger tenant retention and sustainable capital appreciation.
That raises the question of why apartments in particular perform so well, and price is a major factor. In 2024, the median price of a CBD apartment sat 56% below that of a detached house. The gap makes apartments more accessible to buyers chasing high rental yields, and it shows one of the advantages of buying an apartment instead of land.
Rental figures point the same way. Median weekly rent in the CBD rose to $750 in November 2024, up from $690 in 2023, a 9% increase year over year. Vacancy remained tight, averaging 2.4% across 2024. Newly built CBD apartments delivered gross rental yields of 4.8%, which adds to their appeal for investors.
Supply is the other side of the equation. Room for new development inside the CBD grid is getting scarcer, so existing apartments are expected to see significant capital appreciation. The Melbourne CBD Market Outlook 2025 notes that limits on new supply should lift capital values while demand continues to outrun what is available. The report also observes that effective portfolio diversification strategies often begin with securing high-performing urban assets, and it names Melbourne CBD apartments as an example.
The fourth pillar is the national economy. Strong fundamentals across Australia underpin Melbourne’s property market. In late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, a sign of an economy that has proved resilient.
Consumer confidence has recovered too. The ANZ-Roy Morgan Index rose 12 points year over year to reach 86.4 in December 2024. Inflation, meanwhile, dropped to 2.8% in September 2024. According to the report, better sentiment combined with easing prices has produced a favorable climate for property investment and for wealth management advisory services.
Interest rates are expected to lend further support. Major banks, including ANZ and NAB, forecast rate cuts that should reduce borrowing costs and stimulate more 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%. The report says this would Improve affordability further for investors who rely on mortgage broker services or commercial real estate loans.
Pulling these threads together, the report describes Melbourne CBD as offering a rare combination of rapid population growth, transformative infrastructure, and strong rental performance, which it calls an exceptional investment opportunity. The scarcity of new development within the CBD grid strengthens the case, since existing apartments are positioned for capital growth. The report adds that buyers in Melbourne face many considerations, with the right location among the most critical. It recommends working with a qualified financial advisor or buyer’s agent so that a portfolio stays aligned with current macroeconomic shifts. For investors who want to capitalize on the strength of Melbourne’s market, the report’s message is that the time to act is now, and it suggests scheduling a consultation with a certified wealth management expert to explore prime Melbourne CBD apartments.
The numbers tell a consistent story: 446,000 overseas arrivals in 2024, a 60% gap between the dwellings needed and those planned, rents up 9% in a single year, and a $107 billion infrastructure plan still reshaping the city. Whether that mix keeps translating into growth for CBD apartment owners is something the market will settle in the years ahead.
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