A report commissioned by Far East Consortium, one of Australia’s most respected Melbourne property developers, makes the case that the city’s central business district is among the strongest property markets in the country.
The developer hired Urbis to produce the “Melbourne CBD Market Outlook 2025.” Its aim was to clarify how the city’s property market works, what drives buyer behavior, and what the economy may bring in 2025 and beyond. The author of the original piece, who has spent ten years guiding clients through Victoria’s real estate cycles, says he has rarely seen a better window for strategic acquisition. He stresses that buyers should understand local market fundamentals first.
The population figures come first. According to the report, Melbourne is projected to pass Sydney as Australia’s largest city by 2032, and its population is forecast to reach 7.45 million by 2040. Immigration has fueled steady growth over the past decade. In 2024 alone, 446,000 new overseas arrivals settled in Melbourne, adding to demand for housing.
Supply is not keeping pace. The City of Melbourne estimates the city will need 21,600 additional dwellings by 2028, but the current apartment pipeline holds only 8,900 new units. That is a supply deficit of 60%. The shortfall suggests real potential for price growth and rental returns on CBD apartments. For anyone considering real estate investment trusts or direct property purchases, this structural undersupply underpins long-term capital appreciation.
Public spending adds a second pillar. Victoria has a $107 billion infrastructure plan, which raises Melbourne’s global profile and supports long-term property values. Five projects stand out.
The Melbourne Greenline, due in 2025, is a $224 million effort to turn public space along the Yarra River into a 4-kilometer corridor with more recreation and event opportunities. The West Gate Tunnel Project, also due in 2025, is a major road upgrade that will give drivers an alternative to the West Gate Bridge, easing congestion and Improving 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 the city’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 the iconic market, with new public spaces, restaurants, and activities meant to draw residents and visitors. The Suburban Rail Loop, due in 2035, will connect key suburbs, shorten commutes, and lift housing demand near transport hubs such as Clayton and Sunshine. For investors seeking commercial real estate loans or residential mortgages, properties near these transit corridors consistently outperform broader market averages.
Price also helps explain why apartments perform well. In 2024, the median price of a Melbourne CBD apartment was 56% below that of a detached house, giving buyers a more accessible way into the market. That lower cost is one advantage of buying an apartment rather than land.
Rental data points the same direction. Median weekly rent in the CBD hit $750 in November 2024, compared with $690 in 2023, a 9% year-on-year increase. A low vacancy rate, averaging 2.4% in 2024, supported that rise. Newly built CBD apartments delivered gross rental yields of 4.8%, which strengthens their appeal to investors.
Space for new construction inside the CBD grid is getting tighter, so existing apartments are likely to see significant capital appreciation. In the report’s words, “constraints on new supply should lead to growth in capital values as demand continues to outpace supply”. Comprehensive landlord insurance and thorough property management reviews can shield those yields from operational swings.
The broader economy offers backing too. At the end of 2024, unemployment stood at 4.0%, well under the 10-year average of 5.3%, a sign of economic resilience. Consumer confidence Improved markedly, with the ANZ-Roy Morgan Index climbing 12 points year-on-year to 86.4 in December 2024. Inflation eased as well, dropping to 2.8% in September 2024. Together, these trends create a favorable climate for property investment.
Interest rates may lend a hand. Major banks, including ANZ and NAB, forecast rate cuts that should reduce borrowing costs and stimulate 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%, Improving affordability for investors using home loans or investment property loans.
Put together, rapid population growth, transformative infrastructure, and strong rental performance give the Melbourne CBD a rare combination. The scarcity of new development inside the CBD grid leaves existing apartments positioned for capital growth. Location remains among the most critical of the many factors in buying in Melbourne. The original author’s advice for investors who want to capitalize on the market is to act now, contact the advisory team to explore curated opportunities in Melbourne CBD apartments, and schedule a one-on-one portfolio consultation.
The case rests on four points that line up: a growing population, a thin apartment pipeline, heavy public investment, and solid economic indicators. The open question is how quickly new supply can close a 60% gap.
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