By 2032, Melbourne is on track to pass Sydney and become the largest city in Australia.
The Melbourne CBD Market Outlook 2025 projects that its population will climb to 7.45 million by 2040, and that projection underpins much of the case for buying apartments in the city center.
Far East Consortium, one of Australia’s most respected Melbourne property developers, commissioned the report. It hired Urbis to examine how the city’s property market functions, what drives buyer behavior, and how the economy may look in 2025 and beyond. The advisor behind this material says that after a decade of guiding clients through Victoria’s real estate cycles, a better moment for a strategic purchase has rarely come along. In this advisor’s view, Melbourne CBD remains one of the most attractive property markets in the country, thanks to a growing population, major infrastructure projects, and strong rental demand.
Start with the people. Immigration has fueled steady growth in Melbourne for the past decade, and in 2024 alone the city welcomed 446,000 new overseas arrivals. Housing demand keeps rising as a result. The City of Melbourne estimates the city will need 21,600 additional dwellings by 2028, but only 8,900 new apartments are in the pipeline, which leaves a supply deficit of 60%. For investors comparing real estate investment trusts with direct property purchases, this structural undersupply is the foundation of long-term capital appreciation, and it signals real potential for both price growth and rental returns.
Price is another draw. An apartment costs less than a detached house, and in 2024 the median apartment price in the CBD was 56% below the median for a house. That makes apartments the more accessible way into the market.
Rental figures follow the same pattern. The median weekly rent hit $750 in November 2024, up from $690 in 2023, a 9% rise year-on-year. Vacancy stayed tight at an average of 2.4% across 2024, and newly built CBD apartments produced gross rental yields of 4.8%. Because room for new development inside the CBD grid is shrinking, existing apartments appear positioned for significant capital growth. The Melbourne CBD Market Outlook 2025 states that “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 raises Melbourne’s global profile and supports long-term property values. Five projects within the plan stand out.
The Melbourne Greenline, due in 2025, is a $224 million effort to remake public spaces along the Yarra River. It will produce a 4 km route with better recreation and event options.
Also due in 2025, the West Gate Tunnel Project is a major road upgrade that gives drivers an alternative to the West Gate Bridge. It should ease congestion and Improve links between Melbourne’s west and the CBD.
Scheduled for 2028, the North East Link is Victoria’s largest road project. It will connect key arterial roads in Melbourne’s north and east, shorten travel times, and support urban growth across the region.
Set for 2029, the Queen Victoria Market Renewal is a $268 million revitalization of the city’s iconic market. It adds public spaces, restaurants, and activities meant to draw residents and visitors alike.
Planned for 2035, the Suburban Rail Loop will link key suburbs, cut commute times, and lift 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 supplies the backdrop. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, a sign of economic resilience. Consumer confidence has bounced back too: the ANZ-Roy Morgan Index rose 12 points year-on-year to 86.4 in December 2024. Inflation dropped to 2.8% in September 2024. Together, these trends have created a favorable climate for property investment.
Lending conditions may also lend support. Major banks, including ANZ and NAB, forecast interest 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.
Rapid population growth, transformative infrastructure, and strong rental performance, taken together, make Melbourne CBD an exceptional investment opportunity, and the scarcity of new development inside the CBD grid leaves existing apartments 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 to explore curated opportunities in Melbourne CBD apartments and to schedule a one-on-one portfolio consultation.
The figures all point the same way: a growing city, a narrowing window for new supply, and rents that keep climbing. Whether those forces carry the market through 2025 and beyond is the question each prospective buyer will have to answer for themselves.
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