Far East Consortium, a respected Melbourne property developer, hired the consultancy Urbis to examine the city’s central property market.
The resulting study, titled “Melbourne CBD Market Outlook 2025,” looks at how the market operates, what drives buyers, and where the economy may be heading in 2025 and beyond. Three numbers sit at its core: a 60% shortfall in new apartments, a $107 billion state infrastructure plan, and a population forecast of 7.45 million by 2040. Urbis’s overall verdict is that the CBD remains among the most attractive property markets in Australia, supported by population growth, major public works, and strong rental demand.
Start with housing supply. The City of Melbourne estimates the CBD will need 21,600 additional dwellings by 2028, yet only 8,900 new apartments are in the pipeline. That leaves a 60% gap. Land available for new projects inside the CBD grid is also running low. The report states that “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 shortage leaves room for both price gains and rental returns. Whether an investor is considering real estate investment trusts or direct property purchases, the authors argue, this structural undersupply supports long-term capital appreciation.
Demand points the same direction. Melbourne is on track to pass 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 settled in Melbourne, adding to the strain on housing.
Government spending forms a second pillar. Victoria’s $107 billion infrastructure plan raises Melbourne’s international profile and underpins long-term property values. The report highlights five major projects.
The Melbourne Greenline, due in 2025, is a $224 million project that reshapes public spaces along the Yarra River. It opens a 4 km route and broadens the 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, eases congestion, and strengthens 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 connects 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 draw residents and visitors alike. Expected in 2035, the Suburban Rail Loop links key suburbs, shortens commutes, and increases 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 outperform 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, which puts ownership within reach of more buyers.
Rental data tells a similar story. The median weekly rent in the CBD hit $750 in November 2024, compared with $690 in 2023, a 9% increase year on year. Vacancies stayed tight, averaging 2.4% through 2024, and newly built CBD apartments delivered 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 as well. Unemployment stood at 4.0% at the end of 2024, well below the 10-year average of 5.3%, which the report reads as 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 Improved sentiment, that has produced a favorable climate for property investment.
Borrowing may soon get cheaper. Major banks, including ANZ and NAB, forecast 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.
Drawing these strands together, the report concludes that rapid population growth, transformative infrastructure, and strong rental performance make the Melbourne CBD an exceptional investment opportunity, with the scarcity of new developments inside the grid adding to its appeal. Existing apartments, it says, are positioned for capital growth. Location remains one of the most critical of the many factors in buying in Melbourne, and for investors who want to capitalize on the market’s strength, the authors say the time to act is now. They invite readers to contact the advisory team to explore curated opportunities in Melbourne CBD apartments and to book a one-on-one portfolio consultation.
Every figure in the report leans one way: a growing population, a 60% supply gap, and a $107 billion infrastructure plan. What the report leaves open is how long that window will stay available to investors.
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