By 2032, Melbourne is on track to pass Sydney as the largest city in Australia.
The Melbourne CBD Market Outlook 2025 extends that forecast, projecting a population of 7.45 million by 2040, and this projection anchors the case for buying apartments in the downtown core.
Far East Consortium, one of the most respected property developers in Melbourne, commissioned the report. It enlisted Urbis to examine how the city’s property market works, what drives buyer behavior, and how the economy may look in 2025 and beyond. The advisor behind this material has spent ten years guiding clients through Victoria’s real estate cycles and says a better time for a strategic purchase has rarely come along. In that advisor’s assessment, Melbourne CBD remains one of the most attractive property markets in the country, supported by a growing population, major infrastructure projects, and strong rental demand.
The argument starts with people. Immigration has fueled steady growth across Melbourne over the past decade, and 446,000 new overseas arrivals settled in the city in 2024 alone. Demand for housing keeps rising as a result. The City of Melbourne estimates that 21,600 additional dwellings will be required by 2028, yet only 8,900 new apartments are in the pipeline. That leaves a supply deficit of 60%. For investors comparing real estate investment trusts with direct property purchases, this structural shortfall is the foundation of long-term capital appreciation, and it signals potential for both price growth and rental returns.
Price is a second attraction. Apartments cost less than detached houses, and in 2024 the median apartment price in the CBD was 56% below the median house price. That difference makes apartments the more accessible way into the market.
Rental figures tell a matching story. Median weekly rent hit $750 in November 2024, up from $690 in 2023, a 9% increase year-on-year. Vacancy stayed tight, averaging 2.4% across 2024, and newly built CBD apartments delivered gross rental yields of 4.8%. Room for new development inside the CBD grid is running out, so existing apartments appear set 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 spending adds another layer of support. Victoria has an infrastructure plan worth $107 billion, which raises Melbourne’s global profile and underpins long-term property values. Five projects within the plan 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 expanded recreation and event options.
The West Gate Tunnel Project, also due in 2025, is a major road upgrade giving drivers an alternative to the West Gate Bridge. It should ease congestion and Improve links 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, cut 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 brings new public spaces, restaurants, and activities designed to attract residents and visitors alike.
The Suburban Rail Loop, planned for 2035, will link key suburbs, shorten commutes, 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 forms the backdrop. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, a sign of economic resilience. Consumer confidence has recovered too: the ANZ-Roy Morgan Index rose 12 points year-on-year to reach 86.4 in December 2024. Inflation eased to 2.8% in September 2024. Taken together, these trends have created a favorable climate for property investment.
Lending conditions may help further. Major banks, including ANZ and NAB, forecast interest rate cuts that should lower 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.
Rapid population growth, transformative infrastructure, and strong rental performance together make Melbourne CBD an exceptional investment opportunity, and the scarcity of new development inside the CBD grid leaves existing apartments 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 to explore curated opportunities in Melbourne CBD apartments and to schedule a one-on-one portfolio consultation.
Every figure points the same way: a growing city, a narrowing window for new supply, and rents that keep climbing. Whether those forces carry the market through 2025 and beyond is something each prospective buyer will have to decide for themselves.
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