By 2032, Melbourne is projected to overtake Sydney as the largest city in Australia.
By 2040, its population is forecast to reach 7.45 million. Those projections anchor a new market study arguing that the heart of the city ranks among the most attractive property markets in the country.
The study is titled the “Melbourne CBD Market Outlook 2025.” Far East Consortium, one of Australia’s most respected Melbourne property developers, hired the research firm Urbis to produce it. The developer wanted a sharper view of how the city’s property market operates, what motivates buyers, and where the economy is heading in 2025 and beyond. The author of the analysis has advised clients through Victoria’s dynamic real estate cycles for ten years, and says a stronger window for strategic acquisition has rarely opened in that time. The assessment holds that Melbourne CBD is supported by a growing population, transformative infrastructure projects, and strong rental demand. It also states that reading this landscape correctly takes a deep grasp of local market fundamentals.
Start with people. Immigration has fueled steady growth across the past decade, and in 2024 alone Melbourne received 446,000 new overseas arrivals, which added to the demand for housing. Supply is not keeping pace. The City of Melbourne estimates that the city will need 21,600 additional dwellings by 2028, yet the current apartment pipeline is expected to deliver only 8,900. That is a 60% shortfall. A gap of that size, the report argues, leaves considerable room for both price growth and rental returns, and it is the central case for buying into Melbourne CBD apartments. For anyone comparing real estate investment trusts with direct property purchases, the author calls this undersupply the foundation for long-term capital appreciation.
Land is a second constraint. Opportunities for new developments inside the CBD grid are becoming scarcer, 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”.
Entry cost is where apartments separate from houses. Apartments in the CBD sell for far less than detached houses, and that is one advantage of choosing an apartment over land. In 2024, the median apartment price in Melbourne CBD sat 56% below the median for a detached house, which puts ownership within reach of more buyers.
The rental data follow the same pattern. The median weekly rent in the CBD reached $750 in November 2024, compared with $690 in 2023, a 9% increase year-on-year. Vacancy stayed low, averaging 2.4% across 2024. Newly built CBD apartments have delivered strong gross rental yields of 4.8%. Comprehensive landlord insurance and thorough property management reviews can help protect those yields from operational swings.
The national economy supplies firm footing. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, which the report reads as a sign of economic resilience. Consumer confidence has also Improved markedly. The ANZ-Roy Morgan Index rose 12 points year-on-year to 86.4 in December 2024. Inflation eased to 2.8% in September 2024, and together with that optimism it has created a favorable climate for property investment.
Interest rates may add further support. Major banks, including ANZ and NAB, have 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%. That would Improve affordability for investors using home loans or investment property loans.
Public works add one more layer. Several major infrastructure projects Improve Melbourne’s liveability and its appeal as an investment destination. The Melbourne Greenline, due in 2025, is a $224 million project. It will convert public spaces along the Yarra River into a 4-kilometer route with expanded recreation and event opportunities. Also due in 2025, the West Gate Tunnel Project is a major road upgrade. It gives 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 connect 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 city’s iconic market. It adds public spaces, restaurants, and activities to attract residents and visitors. The Suburban Rail Loop, due in 2035, will link key suburbs and shorten commutes. It is also expected to lift housing demand near transport hubs such as Clayton and Sunshine.
Every one of these projects falls within Victoria’s $107 billion infrastructure plan, which enhances Melbourne’s global appeal and drives long-term growth in property values. Investors seeking commercial real estate loans or residential mortgages will find, the report says, that properties near these transit corridors consistently outperform broader market averages.
The author’s conclusion is direct. 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 strengthens the case, since existing apartments are positioned for capital growth. Location ranks among the most critical of the many factors to weigh when buying in Melbourne. For investors who want to capitalize on the city’s robust market dynamics, the author says the time to act is now. The advisory team invites readers to get in touch today to explore curated opportunities in Melbourne CBD apartments and to book a one-on-one portfolio consultation to secure a position in this thriving market.
Boiled down, the report rests on a handful of figures: a 60% supply shortfall, a 2.4% vacancy rate, and a $107 billion infrastructure plan. Each one feeds the same argument about where the CBD market is headed.
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