A decade of guiding clients through Victoria’s real estate cycles has left one adviser with a firm conclusion: he has rarely seen a stronger moment for strategic acquisition than the one now taking shape in Melbourne’s central business district.
Rising population, major infrastructure projects, and robust rental demand set the CBD apart, and in his view, anyone buying there needs to understand the local fundamentals first.
The figures behind that view come from Far East Consortium, regarded as one of Australia’s most respected Melbourne property developers. The company hired Urbis to prepare the “Melbourne CBD Market Outlook 2025” report. Its purpose was to clarify how the city’s property market operates, what drives buyer behavior, and what the economy may bring in 2025 and beyond.
The report starts with demographics. Melbourne is projected to pass Sydney as Australia’s largest city by 2032, and its population is forecast to reach 7.45 million by 2040. Immigration has fueled steady growth over the past decade, and in 2024 alone, 446,000 new overseas arrivals settled in the city, adding to demand for housing.
Supply is the weak point. The City of Melbourne estimates that 21,600 additional dwellings will be needed by 2028, yet the current apartment pipeline holds only 8,900 new apartments. That is a supply deficit of 60%. The shortfall suggests meaningful potential for price growth and rental returns on CBD apartments. For anyone weighing real estate investment trusts or direct property purchases, this structural undersupply is the foundation of long-term capital appreciation. The report also notes that room for new construction inside the CBD grid is becoming scarcer, so existing apartments are likely to see significant capital appreciation. In its words, “constraints on new supply should lead to growth in capital values as demand continues to outpace supply”.
Public spending reinforces the picture. 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 turn public spaces along the Yarra River into a 4 km corridor with better recreation and event opportunities. The West Gate Tunnel Project, also due in 2025, is a major road upgrade that 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. It 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, adding new public spaces, restaurants, and activities to draw residents and visitors. The Suburban Rail Loop, due in 2035, will link key suburbs, shorten commutes, and lift housing demand near 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.
Pricing helps explain why apartments perform well. In 2024, the median price of a Melbourne CBD apartment was 56% below that of a detached house, giving buyers a more accessible way in. That affordability is one of the advantages of choosing an apartment over land.
Rental data points the same way. Median weekly rent in the CBD reached $750 in November 2024, up from $690 in 2023, a 9% year-on-year increase. A low vacancy rate, averaging 2.4% in 2024, supported the climb. Newly built CBD apartments achieved gross rental yields of 4.8%, which adds to their investment appeal. Comprehensive landlord insurance and thorough property management reviews can protect those yields against operational fluctuations.
The broader economy offers additional support. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, a sign of resilience. Consumer confidence has Improved significantly, with the ANZ-Roy Morgan Index rising 12 points year-on-year to 86.4 in December 2024. Inflation has eased as well, falling to 2.8% in September 2024. Together, these trends create a favorable environment for property investment.
Interest rates may also work in buyers’ favor. Major banks, including ANZ and NAB, forecast 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%, Improving affordability for investors using home loans or investment property loans.
Taken together, rapid population growth, transformative infrastructure, and strong rental performance give Melbourne CBD a rare combination, and the scarcity of new developments inside the CBD grid leaves existing apartments positioned for capital growth. Location remains among the most critical of the many factors involved in buying in Melbourne. The original author’s advice to investors who want to capitalize on the market is to act now, contact the advisory team to explore curated opportunities in Melbourne CBD apartments, and schedule a one-on-one portfolio consultation.
A growing population, a thin apartment pipeline, heavy public investment, and solid economic indicators all point the same way for the city’s central market. What remains open is how quickly new supply can close a 60% gap.
If this breakdown gave you something useful, hit the subscribe button so the next video finds you right away. A like helps if it added to your research, and the notification bell will keep you current as the latest news develops.”
