Consider the numbers behind one housing market.
By 2040, Melbourne’s population is projected to reach 7.45 million, and the city is expected to overtake Sydney as Australia’s largest by 2032, according to the Melbourne CBD Market Outlook 2025. That report was commissioned by Far East Consortium, one of Australia’s most respected Melbourne property developers, and prepared by Urbis. The developer wanted a clearer picture of how the city’s property market works, what shapes buyers’ behavior, and where the economy is headed in 2025 and beyond.
Immigration has driven much of that expansion. Melbourne has posted steady population gains for a decade, and in 2024 alone it received 446,000 new arrivals from overseas. Housing has not kept pace. The City of Melbourne estimates the city will need an additional 21,600 dwellings by 2028, yet only 8,900 new apartments are in the pipeline. That leaves a supply shortfall of 60%, a gap that points to potential for both price growth and rental returns on CBD apartments. The author, who says he has spent a decade analyzing property cycles, tells clients that scarcity of supply is the bedrock of long-term capital appreciation. When demand runs this far ahead of supply, he says, urban real estate tends to command premium valuations.
Public spending is reshaping the city at the same time. Victoria has committed to a $107 billion infrastructure plan, which strengthens Melbourne’s global appeal and supports long-term growth in property values. The author notes that, in his experience, values rise faster in corridors directly touched by government capital spending. Five projects stand out:
The Melbourne Greenline, due in 2025, is a $224 million effort to remake public spaces along the Yarra River. It will create a 4 km route with expanded recreation and event opportunities.
The West Gate Tunnel Project, also due in 2025, is a major road upgrade that will give drivers an alternative to the West Gate Bridge. It is meant to ease congestion and Improve links between Melbourne’s west and the CBD.
The North East Link, scheduled for 2028, is Victoria’s largest road project. It will join key arterial roads across Melbourne’s north and east, shortening travel times and supporting urban growth in the region.
The Queen Victoria Market Renewal, scheduled for 2029, is a $268 million revitalization of the city’s iconic market. It will add new public spaces, restaurants, and activities to draw residents and visitors.
The Suburban Rail Loop, set for 2035, will connect key suburbs, cut commute times, and lift housing demand near transport hubs such as Clayton and Sunshine.
Price is another source of demand. In 2024, the median price of a CBD apartment sat 56% below that of a detached house, which put apartments within reach of more buyers. That gap is one of the advantages of buying an apartment rather than land.
Rents tell a similar story. The median weekly rent in the CBD climbed to $750 in November 2024, from $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%. Opportunities for fresh development inside the CBD grid are growing scarcer, 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 wider economy supports the picture. Late in 2024, unemployment stood at 4.0%, well under its 10-year average of 5.3%. Consumer confidence has recovered as well: the ANZ-Roy Morgan Index gained 12 points from a year earlier to reach 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 too. 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 anticipated 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 Melbourne CBD an unusual combination of strengths. Scarce new development within the CBD grid adds to the appeal, since existing apartments are positioned for capital growth. Buyers in Melbourne 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.
When demand outpaces supply by a margin of 60%, the question for investors is less whether the market will move than how soon they position themselves. The data on population, infrastructure, rents, and the economy all point in the same direction, and the next chapter of Melbourne’s growth is only beginning.
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