A renter in the core of Melbourne’s CBD now pays a median of $750 a week.
A year earlier, that figure was $690. The 9 percent annual increase, recorded by late 2024, came while vacancy averaged only 2.4 percent, and it has carried rents in central Melbourne to record highs.
Behind the squeeze lies a mismatch between need and construction. The City of Melbourne estimates that the CBD will require 21,600 additional dwellings by 2028, yet only 8,900 new apartments are expected to be delivered in that time. The shortfall comes to 60 percent.
That estimate is drawn from the “Melbourne CBD Market Outlook 2025,” a report prepared by Urbis for Far East Consortium, one of Australia’s most respected Melbourne property developers. The report surveys how the city’s property market is evolving, what motivates buyers, and where the wider economy may head in 2025 and beyond. The author of the source material says he has spent more than ten years in Australian property. Market cycles have come and gone, he notes, yet the inner core of Victoria’s capital has performed well throughout. He identifies three foundations for long-term wealth creation: population growth, major infrastructure projects, and strong rental demand.
On the supply side, premium sites within the CBD grid are in short supply, which limits how much housing can be added. As a result, the source says, existing stock is positioned for significant capital appreciation. The Melbourne CBD Market Outlook 2025 expects restricted new supply to lift capital values as competition among buyers intensifies. With a shortfall this large, the source contends that apartments in Melbourne could deliver quicker capital growth together with strong rental returns.
Demand pulls in the opposite direction. The report projects Melbourne passing Sydney by 2032 to become Australia’s largest city, with 7.45 million residents expected by 2040. International Immigration has driven much of the steady growth over the past decade. In 2024 alone, 446,000 new overseas arrivals came to Melbourne, producing a continuous flow of housing demand that feeds straight into the CBD property market.
Price widens the pool of buyers further. In 2024, the median CBD apartment cost roughly 56 percent less than a detached house in the suburbs, so high-density housing gives both experienced buyers and first-time investors an easier way in. On the income side, newly built CBD apartments have consistently delivered average gross rental yields of 4.8 percent, which the source frames as a defensive feature for portfolios facing inflation.
The national economy provides steady ground beneath these trends. Australia’s unemployment rate is near 4.0 percent, well below the 10-year historical average of 5.3 percent. Consumer sentiment has recovered noticeably: the ANZ-Roy Morgan Index gained 12 points year-on-year to reach 86.4, while inflation cooled to 2.8 percent. Major financial institutions expect the Reserve Bank of Australia to cut interest rates, taking the cash rate down toward a range of 3.35 percent to 3.85 percent. Cheaper borrowing would follow, and the source anticipates that this cycle will unlock pent-up buyer demand and accelerate market activity across Victoria.
Public investment in infrastructure adds one more layer. A string of major projects is reshaping connectivity and raising property values along key corridors, and they arrive in sequence.
Two are due in 2025. The Melbourne Greenline, a $224 million initiative, will transform public space along the Yarra River into a 4 kilometer linear park offering new recreational and commercial opportunities. The West Gate Tunnel Project will give drivers an Important alternative to the West Gate Bridge, relieving congestion and smoothing freight and passenger traffic between Melbourne’s western precincts and the CBD.
The North East Link, planned for 2028, is Victoria’s largest road project. It joins major arterial routes across the city’s north and east, shortening travel times and supporting decentralized urban growth. In 2029, the Queen Victoria Market Renewal is set to revitalize the historic marketplace at a cost of $268 million, adding public plazas, dining districts, and community hubs for residents and tourists.
Furthest on the horizon is the Suburban Rail Loop, scheduled for 2035. The multi-billion-dollar transit project links middle-ring suburbs and is expected to cut commute times and lift housing demand around hubs such as Clayton and Sunshine. Combined, these projects anchor Victoria’s $107 billion infrastructure pipeline, which the source says strengthens Melbourne’s global competitiveness and supports property value growth for CBD apartments.
From all of this, the source builds its verdict. Rapid population growth, heavy infrastructure spending, and strong rental performance together make the Melbourne CBD an elite investment proposition, it says. Because future high-density development inside the central grid is fundamentally limited, well-located residential assets are in a unique position to outperform over the long term. The source adds that buying property requires strategic insight, and that selecting the right asset class and location is paramount. Its recommendation is to consult a qualified property strategist or financial advisor about Melbourne CBD investment opportunities.
Every figure in the report leans the same way: a 60 percent apartment shortfall, record rents, a growing population, and a $107 billion infrastructure pipeline. Whether construction can ever close the gap with demand is the open question hanging over Melbourne’s city center in the years to come.
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