By 2032, Melbourne is projected to pass Sydney and become Australia’s largest city, and by 2040 its population is forecast to reach 7.
45 million. Those projections come from the Melbourne CBD Market Outlook 2025, and they anchor a wider argument about why apartments in the city’s central business district, or CBD, are attracting investors in 2025 and the years that follow. The case rests on four pillars: a rapidly growing population, large public works, strong rental demand, and a steady national economy. Making sense of it requires a firm grasp of local market fundamentals, financial planning, and broader economic trends.
The report was commissioned by Far East Consortium, described as one of Australia’s most respected Melbourne property developers. The company asked the firm Urbis to produce the Melbourne CBD Market Outlook 2025. Its goal was to better understand how the city’s property market operates, what influences purchasing behavior, and what the economic outlook looks like for 2025 and beyond.
The starting point is people. Over the past decade, Melbourne has recorded consistently strong population growth, driven by Immigration. In 2024 alone, the city received 446,000 new overseas arrivals, which added to the ongoing demand for housing. The City of Melbourne estimates that 21,600 additional dwellings will be needed by 2028. The apartment pipeline, however, is expected to deliver only 8,900 new apartments. That leaves a supply deficit of 60%. According to the report, this gap between what is needed and what is being built points to considerable potential for price growth and rental returns on Melbourne CBD apartments. The report also stresses that understanding demographic shifts is essential for anyone aiming to build long-term wealth through property.
Public investment is the second pillar. Major infrastructure projects are strengthening both Melbourne’s liveability and its standing as a destination for investors.
The first is the Melbourne Greenline, scheduled for 2025. This $224 million project will reshape public spaces along the Yarra River and create a 4-kilometer route with expanded recreation and event opportunities.
The Suburban Rail Loop, slated for 2035, is a rail project that will link key suburbs and shorten commute times. It is also expected to lift housing demand near transport hubs such as Clayton and Sunshine.
The Queen Victoria Market Renewal, set for 2029, is a $268 million revitalization of one of the city’s best-known landmarks. It will add new public spaces, restaurants, and activities designed to draw residents and visitors alike.
The West Gate Tunnel Project, due in 2025, is a major road upgrade that will give drivers an alternative to the West Gate Bridge. The aim is to ease congestion and Improve connections between Melbourne’s west and the CBD.
Finally, the North East Link, planned for 2028, is the largest road project in Victoria’s history. It will join key arterial roads across Melbourne’s north and east, cut travel times, and support urban growth throughout the region.
All five projects belong to Victoria’s $107 billion infrastructure plan, which the report says raises Melbourne’s global appeal and pushes long-term property values higher. For discerning investors, the report adds, proximity to these transport networks goes hand in hand with stronger tenant retention and sustainable capital appreciation.
Next comes the question of why apartments in particular perform so well. Price is a major factor. In 2024, the median price of a CBD apartment was 56% below that of a detached house. That gap makes apartments easier to reach for buyers who want high rental yields, and it illustrates one of the advantages of buying an apartment rather than land.
Rental figures tell a similar story. Median weekly rent in the CBD climbed to $750 in November 2024, compared with $690 in 2023. That is a 9% increase year over year. Vacancy stayed tight, averaging 2.4% across 2024. Newly built apartments in the CBD delivered gross rental yields of 4.8%, which adds to their appeal for investors.
Supply is the other half of the equation. Opportunities for new development inside the CBD grid are becoming scarcer, so existing apartments are expected to see significant capital appreciation. The Melbourne CBD Market Outlook 2025 notes that limits on new supply should lift capital values as demand keeps outrunning what is available. The report also observes that effective portfolio diversification strategies often begin with securing high-performing urban assets, and it names Melbourne CBD apartments as an example.
The national economy forms the fourth pillar. Strong fundamentals across Australia underpin Melbourne’s property market. In late 2024, unemployment stood at 4.0%, well under the 10-year average of 5.3%, a sign of an economy that has proved resilient.
Consumer confidence has recovered as well. The ANZ-Roy Morgan Index gained 12 points year over year and reached 86.4 in December 2024. Inflation, meanwhile, fell to 2.8% in September 2024. According to the report, this combination of Improved sentiment and easing prices has created a favorable climate for property investment and for wealth management advisory services.
Interest rates are expected to help too. Major banks, including ANZ and NAB, forecast rate cuts that should lower borrowing costs and spur more 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%. The report says this would further Improve affordability for investors who use mortgage broker services or commercial real estate loans.
Taken together, the report describes Melbourne CBD as offering a rare mix of fast population growth, transformative infrastructure, and strong rental performance, which it calls an exceptional investment opportunity. The scarcity of new development within the CBD grid adds to that appeal, because existing apartments are positioned for capital growth. The report adds that buyers in Melbourne face many considerations, and that the right location is among the most critical. It recommends working with a qualified financial advisor or buyer’s agent so a portfolio stays aligned with current macroeconomic shifts. For investors hoping to capitalize on the strength of Melbourne’s market, the report’s message is that the time to act is now, and it suggests scheduling a consultation with a certified wealth management expert to explore prime Melbourne CBD apartments.
In short, the figures paint a consistent picture: 446,000 overseas arrivals in 2024, a 60% shortfall between needed and planned dwellings, rents up 9% in a year, and a $107 billion infrastructure plan that will keep reshaping the city. Whether that combination continues to translate into growth for CBD apartment owners is the question the market will answer over the coming years.
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