Far East Consortium, one of Australia’s most respected Melbourne property developers, commissioned the study, titled “Melbourne CBD Market Outlook 2025.” Its purpose was to explain how the city’s property market operates, what drives buyer behavior, and where the economy is heading in 2025 and beyond. The findings describe a CBD that remains among the most attractive property markets in the country, supported by population growth, large infrastructure projects, and strong renter demand.
The supply problem comes first. The City of Melbourne estimates the CBD will need an additional 21,600 dwellings by 2028, but only 8,900 new apartments are in the pipeline. The resulting 60% shortfall suggests room for both price growth and rental returns. This structural undersupply is the foundation for long-term capital appreciation, whether an investor is considering real estate investment trusts or buying property outright. Sites for new development inside the CBD grid are also becoming scarce, so existing apartments are likely to see significant capital gains. The report states that “constraints on new supply should lead to growth in capital values as demand continues to outpace supply.”
Demand is the other half of the equation. According to the report, Melbourne is on track to pass Sydney as Australia’s largest city by 2032, and its population is projected to reach 7.45 million by 2040. Immigration has fueled steady growth for ten years. In 2024 alone, 446,000 new overseas arrivals settled in Melbourne, adding further strain on housing.
Public investment is reinforcing the outlook. Victoria’s $107 billion infrastructure plan raises Melbourne’s global profile and supports long-term property values. Five projects stand out.
The Melbourne Greenline, due in 2025, is a $224 million effort to reshape public spaces along the Yarra River. It will create a 4 km route with more recreation and event opportunities. The West Gate Tunnel Project, also due in 2025, is a major road upgrade that gives drivers an alternative to the West Gate Bridge. It is intended to ease congestion and strengthen connections between Melbourne’s west and the CBD.
The North East Link, scheduled for 2028, is the largest road project in Victoria’s history. It joins key arterial roads across the city’s north and east, cuts travel times, and supports urban growth in that region. The Queen Victoria Market Renewal, set for 2029, is a $268 million revitalization of the city’s iconic market, adding public spaces, restaurants, and activities for residents and visitors. The Suburban Rail Loop, expected in 2035, will connect key suburbs, shorten commutes, and lift housing demand around transport hubs such as Clayton and Sunshine. For investors seeking commercial real estate loans or residential mortgages, properties near these transit corridors consistently outperform broader market averages.
Affordability gives apartments another edge. They cost far less than detached houses, which is one advantage of buying an apartment instead of land. In 2024, the median price of a CBD apartment was 56% below that of a detached house, putting ownership within reach of more buyers.
Rental figures tell a parallel story. The median weekly rent in the CBD rose to $750 in November 2024, up from $690 in 2023, a 9% increase year on year. Vacancies stayed tight, averaging 2.4% across 2024. Newly built CBD apartments delivered strong gross rental yields of 4.8%. Comprehensive landlord insurance and thorough property management reviews help shield those yields from operational swings.
The wider economy adds support. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, a sign of a resilient national economy. Consumer confidence has rebounded too: the ANZ-Roy Morgan Index climbed 12 points year on year to 86.4 in December 2024. Inflation dropped to 2.8% in September 2024, and combined with the Improved sentiment, it has created a favorable climate for property investment.
Borrowing costs may ease as well. Major banks, including ANZ and NAB, forecast rate cuts that should reduce the cost of credit and stimulate 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.
Taken together, rapid population growth, transformative infrastructure, and strong rental performance make Melbourne CBD an exceptional investment opportunity, and the scarcity of new developments inside the CBD grid adds to its appeal. Existing apartments are positioned for capital growth. Location remains one of the most critical of the many factors in buying in Melbourne, and for investors who want to capitalize on the market’s strength, the time to act is now. The advisory team can be contacted to explore curated opportunities in Melbourne CBD apartments and to schedule a one-on-one portfolio consultation.
So the picture is consistent: a growing population, a 60% supply gap, and a $107 billion infrastructure plan all point the same way for Melbourne’s CBD. What remains uncertain is how long that window will stay open for investors.
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