Far East Consortium, one of Australia’s most respected Melbourne property developers, wanted a clearer picture of how the city’s housing market works, what shapes buyer behavior, and where the economy is headed in 2025 and beyond.
To find out, it commissioned Urbis to produce the “Melbourne CBD Market Outlook 2025” report. The findings point to a central business district with a growing population, major infrastructure underway, and strong rental demand, a mix that offers real opportunity to property investors. Making the most of it takes a solid grasp of local market fundamentals, financial planning, and economic trends.
Start with the people. Melbourne is projected to overtake Sydney as Australia’s largest city by 2032, and its population is expected to reach 7.45 million by 2040, according to the report. Immigration has driven steady growth over the past decade. In 2024 alone, 446,000 new overseas arrivals came to Melbourne, adding to the pressure on housing.
The City of Melbourne estimates that 21,600 additional dwellings will be needed by 2028. The current apartment pipeline covers only 8,900 new units, a supply deficit of 60%. That gap between supply and demand points to meaningful potential for price growth and rental returns on CBD apartments. Understanding demographic shifts is essential for anyone aiming to build long-term wealth through property.
Public spending is reinforcing that demand. Several major projects are shaping the city’s future, and they are part of Victoria’s $107 billion infrastructure plan, which strengthens Melbourne’s global appeal and supports long-term property value growth. The Melbourne Greenline, due in 2025, is a $224 million project that transforms public spaces along the Yarra River into a 4 km corridor with more recreation and event opportunities. The West Gate Tunnel Project, also due in 2025, offers an alternative to the West Gate Bridge, easing congestion and Improving connections between Melbourne’s west and the CBD. The North East Link, scheduled for 2028, is Victoria’s largest road project and 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 that adds new public spaces, restaurants, and activities for residents and visitors. The Suburban Rail Loop, slated for 2035, will link key suburbs, shorten commutes, and lift housing demand near transport hubs such as Clayton and Sunshine. For astute investors, proximity to these transport networks correlates directly with higher tenant retention and sustainable capital appreciation.
Price is another reason apartments hold an edge in the CBD. Compared with detached houses, they are far more affordable, which is one of the advantages of buying an apartment over land. In 2024, the median apartment price in Melbourne CBD was 56% below that of a detached house, putting apartments within reach of buyers who want high rental yields.
Rents tell a similar story. Median weekly rent in the CBD rose to $750 in November 2024, up from $690 in 2023, a 9% year-on-year increase. Vacancy was low, averaging 2.4% in 2024. Newly built CBD apartments achieved strong gross rental yields of 4.8%, which adds to their investment appeal.
Supply is tightening further. Opportunities for new development within the CBD grid are becoming scarce, so existing apartments are likely to see significant capital appreciation. The Melbourne CBD Market Outlook 2025 report notes that constraints on new supply should lift capital values as demand keeps outpacing supply. Effective property portfolio diversification strategies often begin with securing high-performing urban assets like Melbourne CBD apartments.
The broader economy provides a solid base. As of late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, a sign of the country’s resilient economy. Consumer confidence has Improved markedly too: the ANZ-Roy Morgan Index rose 12 points year-on-year to 86.4 in December 2024. Inflation fell to 2.8% in September 2024. Together, these trends have created a favorable environment for property investment and wealth management advisory services.
Interest rates may help as well. Major banks, including ANZ and NAB, forecast rate cuts that should lower borrowing costs and stimulate 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%, Improving affordability for investors who use mortgage broker services or commercial real estate loans.
Buying in Melbourne involves many considerations, and the right location is among the most critical. Working with a qualified financial advisor or buyer’s agent helps keep a portfolio aligned with current macroeconomic shifts. For investors looking to capitalize on the market’s robust dynamics, the report’s message is that the time to act is now. The next step is to schedule a consultation with a certified wealth management expert and explore prime Melbourne CBD apartments.
Rapid population growth, transformative infrastructure, and strong rental performance, set against a shortage of new CBD development, are what make Melbourne’s city center such a compelling investment. Existing apartments stand to benefit most from that scarcity.
If you want more clear-eyed coverage of the stories shaping markets and the wider world, hit the subscribe button and give this video a like. Turn on the notification bell too, so the latest updates reach you the moment they are published.”
