The developer asked Urbis to prepare the Melbourne CBD Market Outlook 2025, a comprehensive study of how the local property market is shifting, what influences buyers’ purchasing behavior, and where the broader economy is heading in 2025 and beyond. The inner core of Victoria’s capital has held up well through many market cycles over the past decade, and the report’s findings suggest that resilience is continuing. Population growth, major infrastructure projects, and strong rental demand together create what the research describes as favorable conditions for long-term wealth creation.
Start with people. According to the Melbourne CBD Market Outlook 2025, Melbourne is on track to overtake Sydney as Australia’s largest city by 2032, and its population is projected to reach 7.45 million by 2040. Immigration from overseas has been the main engine of that growth over the past decade. In 2024 alone, Melbourne received 446,000 new overseas arrivals, a steady stream of new households that need somewhere to live and that directly affects the CBD real estate market.
Housing supply is not keeping pace. The City of Melbourne estimates that 21,600 additional dwellings will be needed by 2028, yet only 8,900 new apartments are expected to be delivered. That leaves a supply deficit of 60%. The gap between what the city needs and what is being built is the central reason the report sees potential for accelerated capital growth and strong rental returns in Melbourne apartments.
Affordability adds to the pull. In 2024, the median price of an apartment in the CBD was roughly 56% below the median for a detached suburban house. That discount makes high-density housing an accessible entry point for experienced buyers and first-time investors alike.
Rents tell a similar story. The median weekly rent in the CBD core rose to $750 in late 2024, from $690 a year earlier, a year-on-year increase of 9%. Vacancy is tight, averaging just 2.4%. Newly built CBD apartments have consistently delivered average gross rental yields of 4.8%, which the report presents as a defensive quality for a portfolio exposed to inflation.
Looking ahead, the report expects scarcity to push prices up. Prime land parcels within the CBD grid are running short, and the Melbourne CBD Market Outlook 2025 notes that strict limits on new supply will naturally lift capital values as buyers compete for existing stock.
A wave of large infrastructure projects is also reshaping the city’s connectivity and lifting property values along key corridors. Five projects stand out:
The Melbourne Greenline, due in 2025, is a $224 million initiative that will convert public spaces along the Yarra River into a 4 km linear park, creating new recreational and commercial opportunities.
The West Gate Tunnel Project, also due in 2025, is a critical road upgrade that gives drivers a vital alternative to the West Gate Bridge. It is meant to ease congestion and smooth freight and passenger traffic between Melbourne’s western precincts and the CBD.
The North East Link, scheduled for 2028, is Victoria’s largest road project. It will join major arterial routes in Melbourne’s north and east, shorten travel times, and support decentralized urban growth.
The Queen Victoria Market Renewal, set for 2029, is a $268 million revitalization of the city’s historic marketplace. It will add new public plazas, dining districts, and community hubs aimed at drawing both residents and tourists.
The Suburban Rail Loop, planned for 2035, is a multi-billion-dollar transit project linking the middle-ring suburbs. It is expected to cut commute times and raise housing demand near strategic transport hubs such as Clayton and Sunshine.
Together, these projects form the backbone of Victoria’s $107 billion infrastructure pipeline. The report says that pipeline strengthens Melbourne’s global competitiveness and supports property value growth for CBD apartments, while enhancing the city’s liveability and its long-term appeal as a high-yield investment destination.
The national economy provides a stable base underneath all of this. Australia’s unemployment rate sits around 4.0%, comfortably below its 10-year historical average of 5.3%. Consumer sentiment has also recovered visibly: the ANZ-Roy Morgan Index climbed 12 points year-on-year to 86.4, helped by inflation cooling to 2.8%.
Borrowing costs are expected to ease as well. Major financial institutions anticipate rate cuts by the Reserve Bank of Australia, projected to bring the cash rate down toward a range of 3.35% to 3.85%. The report expects that easing cycle to release pent-up buyer demand and speed up market activity across Victoria.
Put together, rapid demographic growth, heavy infrastructure spending, and strong rental performance make Melbourne’s CBD a compelling investment proposition, according to the report. Because future high-density development within the central grid is fundamentally scarce, well-located residential assets are positioned for long-term outperformance. Buying property takes strategic insight, and choosing the right asset class and location is paramount. Anyone looking to benefit from Melbourne’s economic momentum is advised to speak with a qualified property strategist or financial advisor about the city’s leading CBD investment opportunities.
The numbers in the report point in one direction: a growing population, a shrinking supply of new apartments, and rents that keep rising. Whether the city’s housing supply can close that 60% gap is the question that will shape the CBD market in the years to come.
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