Start with a mismatch.
Melbourne’s city government says it needs 21,600 more dwellings by 2028. The apartment pipeline is on track to deliver only 8,900. That leaves a shortfall of 60%, and a recent industry report treats it as the clearest sign of where the city’s central apartment market is headed.
The document is the Melbourne CBD Market Outlook 2025. Far East Consortium, which the report describes as one of Australia’s most respected Melbourne property developers, commissioned it. The firm Urbis wrote it. Its stated purpose is to lay out how Melbourne’s property market operates, what influences the decisions buyers make, and what the economy looks like for 2025 and the years after. The report organizes its argument around four drivers for buying apartments in the central business district, or CBD: population growth, public investment, rental demand, and a stable national economy. It cautions that weighing the opportunity properly takes a solid understanding of local market fundamentals, financial planning, and wider economic trends.
The population forecasts set the scene. Melbourne is expected to reach 7.45 million residents by 2040, and it is projected to pass Sydney by 2032 to become the largest city in Australia.
Immigration has fueled that growth for the past decade. In 2024 alone, Melbourne took in 446,000 new overseas arrivals. Housing has come under strain as a result. Against the City of Melbourne’s estimate of 21,600 needed dwellings by 2028, the 8,900 apartments in the pipeline cover well under half the requirement. The report reads the distance between need and construction as evidence of considerable room for price growth and rental returns on CBD apartments. It adds that anyone building long-term wealth through property has to understand demographic shifts.
On public investment, the report singles out five projects that it says are lifting Melbourne’s liveability and its standing among investors.
The Melbourne Greenline is scheduled for 2025. The $224 million project will reshape public spaces along the Yarra River and form a 4-kilometer route offering more recreation and event opportunities. The West Gate Tunnel Project is also due in 2025. This major road upgrade gives drivers an alternative to the West Gate Bridge, eases congestion, and Improves connections between Melbourne’s west and the CBD.
The North East Link is planned for 2028 and is the largest road project in Victoria’s history. It will join key arterial roads across Melbourne’s north and east, shorten travel times, and support urban growth throughout the region. The Queen Victoria Market Renewal follows in 2029. This $268 million revitalization of one of the city’s best-known landmarks will bring new public spaces, restaurants, and activities intended to draw residents and visitors alike. The last of the five is the Suburban Rail Loop, slated for 2035. It will link key suburbs and shorten commutes, and it is also expected to raise housing demand around transport hubs such as Clayton and Sunshine.
All five sit inside Victoria’s $107 billion infrastructure plan. In the report’s words, the plan strengthens Melbourne’s global appeal and drives long-term property values upward. It says that for discerning investors, proximity to these transport networks goes hand in hand with stronger tenant retention and sustainable capital appreciation.
The report then turns to why apartments in particular stand out, and it starts with price. In 2024, the median price of a CBD apartment was 56% below the median for a detached house. That difference opens the market to buyers pursuing high rental yields, and the report presents it as one advantage of buying an apartment instead of land.
Rental demand, the third driver, points the same way. Median weekly rent in the CBD reached $750 in November 2024, compared with $690 in 2023. That is a 9% increase over the year. Vacancy stayed tight, averaging 2.4% across 2024. Newly built CBD apartments produced gross rental yields of 4.8%, which the report counts as another attraction for investors.
Supply is the counterpart to demand. Land available for new development inside the CBD grid is running short, so the report expects existing apartments to see significant capital appreciation. It notes that restrictions on new supply should raise capital values for as long as demand keeps outrunning availability. It also observes that effective portfolio diversification strategies often begin with securing high-performing urban assets, and it names Melbourne CBD apartments as one such example.
The fourth driver is the national economy, where the report finds strong fundamentals behind Melbourne’s market. Unemployment stood at 4.0% in late 2024, well under the 10-year average of 5.3%, which the report takes as a sign of resilience. Consumer confidence has recovered as well. The ANZ-Roy Morgan Index rose 12 points year over year to hit 86.4 in December 2024. Inflation eased to 2.8% in September 2024. According to the report, Improved sentiment paired with cooling prices has created a favorable climate for property investment and for wealth management advisory services.
Interest rates are expected to add support. Major banks, including ANZ and NAB, forecast rate cuts that should reduce borrowing costs and stimulate activity in the property market. The Reserve Bank of Australia’s cash rate is expected to drop to between 3.35% and 3.85% by December 2025. The report says that would Improve affordability further for investors who depend on mortgage broker services or commercial real estate loans.
Taken together, the report describes Melbourne CBD as offering a rare combination of rapid population growth, transformative infrastructure, and strong rental performance, and it calls the result an exceptional investment opportunity. The shortage of new development land within the CBD grid strengthens that argument, because existing apartments are positioned for capital growth. The report acknowledges that buyers in Melbourne face many considerations, with the right location among the most critical. It recommends working with a qualified financial advisor or buyer’s agent so that a portfolio stays in step with current macroeconomic shifts. For investors who want to capitalize on the market’s strength, its 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.
Every pillar of the report’s argument rests on a figure: 446,000 arrivals, a 60% shortfall in housing, a 9% jump in rents, and a $107 billion infrastructure plan, all feeding a city expected to pass 7.45 million people by 2040. That is the full case the report makes for the CBD, as presented by the developer that commissioned it.
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