A report commissioned by Far East Consortium, one of Australia’s most respected Melbourne property developers, sits at the center of a bullish pitch for the city’s downtown apartments.
Titled the Melbourne CBD Market Outlook 2025, it was produced by Urbis, which the company hired to examine how the city’s property market works, what drives buyers, and where the economy may head in 2025 and beyond. Its headline forecast: Melbourne will overtake Sydney by 2032 to become the largest city in Australia, and its population will climb to 7.45 million by 2040.
The most quoted figure concerns supply. The City of Melbourne estimates the city will need 21,600 additional dwellings by 2028. Only 8,900 new apartments are in development, a 60% shortfall.
An advisor who circulated the material says he has spent ten years guiding clients through Victoria’s property cycles, and that few moments have looked better for a strategic purchase. In his view, Melbourne CBD remains one of the most attractive property markets in the country, backed by population growth, major infrastructure projects, and strong rental demand.
Population comes first. Immigration has driven steady growth in Melbourne for a decade, and 446,000 new overseas arrivals settled in the city in 2024 alone. Housing demand keeps rising as a result. For investors comparing real estate investment trusts with direct property ownership, the structural shortage supports long-term capital appreciation and signals real potential for both price growth and rental returns.
Price of entry is the second factor. Apartments cost less than land-based homes. In 2024, the median apartment price in the CBD was 56% below the median for a detached house, which makes an apartment the easier path into the market for many buyers.
Rents, meanwhile, are climbing. The median weekly rent reached $750 in November 2024, compared with $690 in 2023, a 9% rise year over year. Vacancy averaged a tight 2.4% through 2024, and newly built CBD apartments delivered gross rental yields of 4.8%. Space for new development inside the CBD grid is running out, so existing apartments look set for significant capital growth. The report puts it this way: “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 a further layer. Victoria has an infrastructure plan worth $107 billion, which lifts Melbourne’s global profile and underpins long-term property values. Five projects within it 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-kilometer route with expanded recreation and event options.
The West Gate Tunnel Project, also due in 2025, is a major road upgrade that gives 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 join key arterial roads across Melbourne’s north and east, shorten travel times, and support urban growth in 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 residents and visitors alike.
The Suburban Rail Loop, planned for 2035, will connect 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 near 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 add to the momentum. 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.
Pulling these strands together, the advisory team calls Melbourne CBD an exceptional investment opportunity, pointing to 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. Of 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 data all points the same way: 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 call each prospective buyer will have to make for themselves.
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