A 60% supply gap, a $107 billion infrastructure plan, and a population projected to hit 7.
45 million by 2040. Those three figures sit at the center of a new report on the Melbourne central business district. Far East Consortium, one of Australia’s most respected Melbourne property developers, hired the consultancy Urbis to write “Melbourne CBD Market Outlook 2025.” The assignment covered how the city’s property market functions, what drives buyer behavior, and where the economy may be heading in 2025 and after. Urbis portrays a CBD that still ranks among the country’s most attractive property markets, supported by population growth, large infrastructure projects, and robust renter demand.
The supply numbers come first. The City of Melbourne estimates the CBD will need 21,600 more dwellings by 2028, but only 8,900 new apartments are in the pipeline, a deficit of 60%. Land for new development inside the CBD grid is also running low. In the report’s words, “constraints on new supply should lead to growth in capital values as demand continues to outpace supply.” Urbis expects existing apartments to appreciate significantly and says the shortfall leaves room for both price growth and rental returns. Whether an investor is considering real estate investment trusts or direct property purchases, the report argues, this structural undersupply backs long-term capital appreciation.
Demand is rising at the same time. Melbourne is on course to overtake Sydney as Australia’s largest city by 2032. Immigration has fueled steady growth for a decade, and in 2024 alone, 446,000 new overseas arrivals landed in Melbourne, adding to the strain on housing.
Government spending forms the next layer. Victoria’s $107 billion infrastructure plan raises Melbourne’s global profile and underpins long-term property values. Five major projects stand out.
The Melbourne Greenline, due in 2025, is a $224 million project that remakes public spaces along the Yarra River. It opens a 4 km route and expands options for recreation and events. Also due in 2025, the West Gate Tunnel Project is a major road upgrade that offers drivers an alternative to the West Gate Bridge, easing congestion and tightening links between Melbourne’s west and the CBD.
Scheduled for 2028, the North East Link is the largest road project in Victoria’s history. It ties together key arterial roads across the north and east, cuts travel times, and supports urban growth in that part of 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 meant to attract residents and visitors alike. Expected in 2035, the Suburban Rail Loop connects key suburbs, shortens commutes, and boosts housing demand around transport hubs such as Clayton and Sunshine. For investors pursuing commercial real estate loans or residential mortgages, the report says properties near these transit corridors consistently beat broader market averages.
Pricing also favors apartments. In 2024, the median price of a CBD apartment was 56% lower than that of a detached house, putting ownership within reach of more buyers.
Rental figures point the same way. The median weekly rent in the CBD hit $750 in November 2024, compared with $690 in 2023, a 9% rise year on year. Vacancies stayed tight, averaging 2.4% through 2024, and newly built CBD apartments produced gross rental yields of 4.8%. Comprehensive landlord insurance and thorough property management reviews, the report adds, help shield those yields from operational swings.
The wider economy lends support. At the end of 2024, unemployment was 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 better sentiment, it has produced a favorable climate for property investment.
Borrowing may get cheaper. Major banks, including ANZ and NAB, forecast 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 drop to between 3.35% and 3.85%, which would Improve affordability for investors using home loans or investment property loans.
Taken together, the report concludes, rapid population growth, transformative infrastructure, and strong rental performance make the Melbourne CBD an exceptional investment opportunity, and the scarcity of new developments inside the grid adds to the appeal. Existing apartments are positioned for capital growth. Location remains among the most critical of the many factors in buying in Melbourne, and for investors who want to capitalize on the market’s strength, the report says the time to act is now. Its authors invite readers to contact the advisory team to explore curated opportunities in Melbourne CBD apartments and to book a one-on-one portfolio consultation.
A growing population, a 60% supply gap, and a $107 billion infrastructure plan all point the same direction for the CBD. What remains unsettled is how long that window will stay open for investors.
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