The City of Melbourne puts the number of additional dwellings the city will need by 2028 at 21,600, but only 8,900 new apartments are in the pipeline.
That claim comes from the Melbourne CBD Market Outlook 2025, a report commissioned by Far East Consortium, one of Australia’s most respected Melbourne property developers. The company hired Urbis to examine how the city’s property market works, what drives buyers, and where the economy may head in 2025 and beyond. The report projects that Melbourne will overtake Sydney by 2032 as the largest city in Australia, and that its population will hit 7.45 million by 2040. The advisor who shared the material says he has spent a decade guiding clients through Victoria’s real estate cycles, and that few moments have looked better for a strategic purchase. In his assessment, Melbourne CBD remains one of the country’s most attractive property markets, backed by a growing population, major infrastructure projects, and strong rental demand.
The first driver is population. Immigration has powered steady growth across Melbourne for ten years, and 446,000 new overseas arrivals came to the city in 2024 alone. Housing demand keeps rising as a result. For investors comparing real estate investment trusts with direct property purchases, the structural shortage described above supports long-term capital appreciation, and it points to real potential for both price growth and rental returns.
The second is price. Apartments cost less than land-based homes. In 2024, the median apartment price in the CBD ran 56% below the median for a detached house, which makes an apartment the easier entry point for many buyers.
Rents are climbing as well. The median weekly rent reached $750 in November 2024, compared with $690 in 2023, a 9% rise year over year. Vacancy stayed tight at an average of 2.4% across 2024, and newly built CBD apartments delivered gross rental yields of 4.8%. Because room for new development inside the CBD grid is running out, existing apartments look positioned for significant capital growth. The Melbourne CBD Market Outlook 2025 states that “constraints on new supply should lead to growth in capital values as demand continues to outpace supply”. Investors can protect those yields from operational swings by securing comprehensive landlord insurance and conducting thorough property management reviews.
Public works add another layer of support. Victoria has an infrastructure plan worth $107 billion, which lifts Melbourne’s global profile and underpins long-term property values. Five projects in the plan stand out.
The Melbourne Greenline, due in 2025, is a $224 million project to reshape public spaces along the Yarra River. It will create a 4-kilometer route with expanded recreation and event options.
The West Gate Tunnel Project, also due in 2025, is a major road upgrade that offers drivers an alternative to the West Gate Bridge. It is expected to ease congestion and strengthen links between Melbourne’s west and the CBD.
The North East Link, scheduled for 2028, is the largest road project in Victoria. It will connect key arterial roads in Melbourne’s north and east, shorten travel times, and support 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 designed to attract both residents and visitors.
The Suburban Rail Loop, planned for 2035, will link key suburbs, cut commute times, and boost housing demand near transport hubs such as Clayton and Sunshine.
For investors pursuing commercial real estate loans or residential mortgages, properties close to these transit corridors have consistently outperformed broader market averages.
The national economy provides the backdrop. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, a sign of a resilient economy. Consumer confidence has recovered too: the ANZ-Roy Morgan Index rose 12 points year over year to 86.4 in December 2024. Inflation eased to 2.8% in September 2024. Together, these trends have created a favorable climate for property investment.
Lending conditions may help. Major banks, including ANZ and NAB, forecast interest 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%, which would Improve affordability for investors using home loans or investment property loans.
Pulling these threads together, the advisory team calls Melbourne CBD an exceptional investment opportunity, citing rapid population growth, transformative infrastructure, and strong rental performance. With so little room left for new development inside the CBD grid, existing apartments are positioned for capital growth. Among the many factors to weigh when buying in Melbourne, location remains one of the most critical. For investors who want to capitalize on the market’s strength, the advisory team invites them to get in touch, explore curated opportunities in Melbourne CBD apartments, and schedule a one-on-one portfolio consultation.
The figures lean in one direction: a growing city, a shrinking window for new supply, and rents that keep rising. Whether those forces carry the market through 2025 and beyond is a question each prospective buyer will have to answer personally.
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