Start with the gap.
By 2028, the City of Melbourne estimates the central business district will need 21,600 more dwellings. Developers have planned only 8,900 new apartments, so the pipeline falls roughly 60% short.
The author, who says he has spent a decade analyzing property cycles, tells clients that limited supply is what supports capital appreciation over the long run. In his view, urban real estate tends to command premium valuations when demand runs this far ahead of construction.
The figures come from the Melbourne CBD Market Outlook 2025, a report Urbis prepared for Far East Consortium, one of Australia’s most respected Melbourne property developers. The developer commissioned the study to understand how the city’s property market works, what shapes buyers’ behavior, and where the economy is headed in 2025 and beyond.
Population growth sits at the center of that demand. The report projects 7.45 million residents in Melbourne by 2040, and says the city will pass Sydney to become Australia’s largest by 2032. Immigration has driven much of this growth. Melbourne has posted steady population gains for a decade, and in 2024 alone it received 446,000 new arrivals from overseas. Construction has failed to match that inflow, and the shortfall points to room for both price growth and rental returns on CBD apartments.
Public spending is reshaping the city at the same time. Victoria has committed to a $107 billion infrastructure plan, which lifts Melbourne’s international profile and supports property values over the long term. The author says that in his experience, values rise faster in corridors directly touched by public capital spending.
Five projects stand out, and they arrive on different timelines. The Melbourne Greenline and the West Gate Tunnel Project are both due in 2025. The Greenline is a $224 million effort to remake public spaces along the Yarra River, creating a 4 km route with more recreation and event opportunities. The West Gate Tunnel Project is a major road upgrade that gives drivers an alternative to the West Gate Bridge, easing congestion and Improving links between Melbourne’s west and the CBD.
The North East Link follows in 2028. It is Victoria’s largest road project, and it will join key arterial roads across Melbourne’s north and east, cutting travel times and supporting urban growth in that region. In 2029 comes the Queen Victoria Market Renewal, a $268 million revitalization of the city’s iconic market, which adds new public spaces, restaurants, and activities to draw residents and visitors. Furthest out is the Suburban Rail Loop, set for 2035. It will connect key suburbs, shorten commutes, and lift housing demand near transport hubs such as Clayton and Sunshine.
Price is another factor widening the buyer pool. In 2024, the median price of a CBD apartment sat 56% below that of a detached house, which put apartments within reach of more people. That discount is one of the advantages of buying an apartment instead of land.
Rental data points the same direction. The median weekly rent in the CBD reached $750 in November 2024, compared with $690 in 2023, a 9% increase year over year. Vacancy averaged just 2.4% across 2024, and newly built CBD apartments achieved gross rental yields of 4.8%. Room for fresh development inside the CBD grid is shrinking, so existing apartments are likely to see significant capital gains. 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.”
The broader economy supports this picture. Late in 2024, unemployment stood at 4.0%, well below its 10-year average of 5.3%. Consumer confidence has also recovered, with the ANZ-Roy Morgan Index rising 12 points from a year earlier to 86.4 in December 2024. Inflation fell to 2.8% in September 2024. Together, these trends have created favorable conditions for property investment.
Borrowing costs are expected to ease as well. Major banks, including ANZ and NAB, forecast interest rate cuts, which should 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%, Improving affordability for investors seeking CBD apartments.
Taken together, rapid population growth, transformative infrastructure, and strong rental performance give the Melbourne CBD an unusual set of strengths. Limited new development inside the CBD grid adds to the appeal, since existing apartments are positioned for capital growth. Buyers have many factors to weigh, and the right location is among the most critical. For investors who want to capitalize on the market’s strong fundamentals, the author says the time to act is now. He invites readers to explore a curated portfolio of premium Melbourne CBD apartments and to book a private consultation with a senior advisory team to secure a position in this market.
With demand outrunning supply by 60%, the question for investors is less whether the market will move than how soon they position themselves. Population, infrastructure, rents, and the broader economy all point the same way, and the next chapter of Melbourne’s growth is only beginning.
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