Melbourne’s central business district, known as the CBD, is facing a housing gap.
The City of Melbourne projects that 21,600 additional dwellings will be needed by 2028. The apartment pipeline, meanwhile, contains only 8,900 new units. That leaves supply 60% short of demand, and the shortfall sits at the center of a new argument for buying CBD apartments in 2025 and beyond.
The argument comes from a research report. Far East Consortium, one of Australia’s most respected Melbourne property developers, commissioned Urbis to prepare the Melbourne CBD Market Outlook 2025. The developer wanted a sharper view of how the city’s property market works, what drives buyers, and where the economy is likely to head in 2025 and afterward. The resulting material describes the CBD as one of Australia’s most attractive property markets, supported by population growth, transformative infrastructure, and strong rental demand. It also says that anyone entering the market should understand why CBD apartments have proved such a resilient asset class.
Population growth is the first pillar. The report expects Melbourne to overtake Sydney as Australia’s largest city by 2032 and to reach 7.45 million residents by 2040. Immigration has fueled strong growth over the past decade, and in 2024 alone the city received 446,000 new overseas arrivals, which added to housing demand. Set against 8,900 planned apartments and 21,600 needed dwellings, that gap points to considerable room for price growth and rental returns on CBD apartments.
The author of the material says they have spent a decade analyzing property cycles. According to the author, clients hear the same advice again and again: scarce supply is the ultimate foundation of long-term capital appreciation. When demand outstrips supply by this margin, the author says, urban real estate naturally commands premium valuations.
Affordability is the second pillar. The material lists price as one advantage of choosing an apartment over land. In 2024, the median CBD apartment price was 56% below the median for a detached house, which made apartments the more accessible option for buyers.
Rental figures tell a similar story. Median weekly rents in the CBD reached $750 in November 2024, up from $690 in 2023, a year-on-year increase of 9%. Vacancy remained low, averaging 2.4% across 2024. Newly built CBD apartments delivered gross rental yields of 4.8%, a number the material says strengthens their appeal to investors.
Space for new construction is also running out. Opportunities for fresh developments inside the CBD grid are becoming scarcer, so existing CBD apartments are likely to see significant capital appreciation. The Melbourne CBD Market Outlook 2025 report notes that “constraints on new supply should lead to growth in capital values as demand continues to outpace supply”.
Government spending forms another layer. Major infrastructure projects raise Melbourne’s livability and its pull as an investment destination, and the material highlights five of them. The Melbourne Greenline, due in 2025, is a $224 million project that will reshape public spaces along the Yarra River. It creates a 4 kilometer route with Improved recreation and event opportunities. 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 meant to ease congestion and Improve connectivity between Melbourne’s west and the CBD. The North East Link, scheduled for 2028, is Victoria’s largest road project. It will join key arterial roads in Melbourne’s north and east, cutting travel times and supporting urban growth across the region. The Queen Victoria Market Renewal, set for 2029, is a $268 million revitalization of Melbourne’s iconic market. It brings new public spaces, restaurants, and activities designed to draw residents and visitors. The Suburban Rail Loop, planned for 2035, is a rail project linking key suburbs. It is intended to shorten commutes and lift housing demand near transport hubs such as Clayton and Sunshine.
All five projects fall under Victoria’s $107 billion infrastructure plan. The material says the plan boosts Melbourne’s global appeal and drives long-term growth in property values. The author adds that, in their experience, values consistently rise faster in corridors directly touched by government capital expenditure.
The broader economy supplies the final piece. Australia’s strong economic fundamentals underpin the Melbourne market. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, which the material reads as a sign of resilience. Consumer confidence has also Improved significantly: the ANZ-Roy Morgan Index climbed 12 points year-on-year to 86.4 in December 2024. That sentiment, combined with inflation easing to 2.8% in September 2024, has created a favorable climate for property investment.
Interest rates may lend further support. Major banks, including ANZ and NAB, forecast rate cuts that are expected to reduce borrowing costs and stimulate more activity in the property market. By December 2025, the Reserve Bank of Australia’s cash rate is anticipated to fall to between 3.35% and 3.85%, which would further Improve affordability for investors seeking Melbourne CBD apartments.
Taken together, the material argues, rapid population growth, transformative infrastructure, and strong rental performance give the Melbourne CBD an exceptional combination. The scarcity of new development inside the CBD grid adds to the appeal, because existing apartments are positioned for capital growth. Buyers in Melbourne have many factors to weigh, and the right location ranks among the most critical. For investors hoping to capitalize on the market’s robust dynamics, the material says the time to act is now. It invites readers to take the next step in their wealth-creation journey by exploring a curated portfolio of premium Melbourne CBD apartments and scheduling a private consultation with a senior advisory team to secure a position in this thriving market.
In the material’s view, a 60% supply gap, a population heading toward 7.45 million, rising rents, and a $107 billion infrastructure plan all point in one direction. What remains open is how quickly the city’s apartment supply can respond to demand on this scale.
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