Behind the Melbourne CBD Market Outlook 2025 sits a report commissioned by Far East Consortium, a developer regarded as one of the most respected in Melbourne, and written by Urbis.
Its purpose was to explain how the city’s property market functions, what drives buyer behavior, and where the economy is headed in 2025 and beyond.
The report’s central forecast is a change in rank. By 2032, Melbourne is expected to overtake Sydney as Australia’s largest city, and by 2040 its population is projected to reach 7.45 million. On that basis, the report argues the central business district remains one of the most attractive property markets in the country. Population growth, major infrastructure projects, and strong rental demand all push in the same direction. Anyone weighing an investment there, it says, needs a firm grasp of local market fundamentals, financial planning, and broader economic trends.
Demand is the first piece. Melbourne’s population has grown steadily over the past decade, largely because of Immigration. In 2024 alone, 446,000 new overseas arrivals came to the city, adding pressure to the housing market. The City of Melbourne estimates that 21,600 more dwellings will be needed by 2028, yet only 8,900 new apartments are in the pipeline. That leaves a supply deficit of 60%. According to the report, the gap points to significant potential for price growth and rental returns on CBD apartments, and understanding demographic shifts is essential for anyone aiming to build long-term wealth through property.
Pricing and rents show how that demand is playing out. In 2024, the median price of a CBD apartment was 56% below that of a detached house. Apartments therefore offer a more accessible entry point for buyers pursuing high rental yields, which the report presents as one advantage of buying an apartment rather than land.
Rents are climbing as well. The median weekly rent in the CBD hit $750 in November 2024, up from $690 in 2023, a year-on-year increase of 9%. Vacancy remained low, averaging 2.4% through 2024. Newly built CBD apartments produced gross rental yields of 4.8%, which adds to their appeal for investors.
Supply constraints add another layer. Space for new development inside the CBD grid is running short, so existing apartments are likely to see significant capital appreciation. The report notes that limits on new supply should lift capital values while demand keeps outpacing availability. It also observes that effective portfolio diversification often starts with securing high-performing urban assets, and it names Melbourne CBD apartments as one example.
The national economy provides a supportive backdrop. As of late 2024, Australia’s unemployment rate was 4.0%, well below the 10-year average of 5.3%, which the report reads as a sign of a resilient economy. Consumer confidence has Improved 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 climate for property investment and wealth management advisory services.
Borrowing costs are expected to ease as well. Major banks, including ANZ and NAB, have forecast rate cuts that should lower loan costs and 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%. That would further Improve affordability for investors who rely on mortgage broker services or commercial real estate loans.
Infrastructure is the second pillar. Victoria’s $107 billion infrastructure plan includes a series of major projects that reinforce Melbourne’s liveability and its pull as an investment destination.
The Melbourne Greenline, due in 2025, is a $224 million project to transform public spaces along the Yarra River, creating a 4-kilometer journey with expanded recreation and event opportunities.
The West Gate Tunnel Project, also due in 2025, is a major road upgrade offering drivers an alternative to the West Gate Bridge. It is designed to ease congestion and Improve connectivity 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 in Melbourne’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 city’s iconic market, bringing new public spaces, restaurants, and activities to attract residents and visitors.
The Suburban Rail Loop, expected in 2035, will connect key suburbs, shorten commutes, and boost housing demand near transport hubs such as Clayton and Sunshine.
According to the report, this wave of investment enhances Melbourne’s global appeal and drives long-term growth in property values. For astute investors, it says, proximity to these transport networks correlates directly with higher tenant retention and sustainable capital appreciation.
The report closes by tying these threads together. Rapid population growth, transformative infrastructure, and strong rental performance combine to make the CBD an exceptional investment opportunity, and the scarcity of new development inside the CBD grid sharpens that appeal, because existing apartments are positioned for capital growth. Among the many factors buyers must weigh, location is one of the most critical. Working with a qualified financial advisor or buyer’s agent helps ensure a portfolio aligns with current macroeconomic shifts. For investors who want to capitalize on the strength of Melbourne’s market, the report says the time to act is now, and it recommends scheduling a consultation with a certified wealth management expert to explore prime Melbourne CBD apartments.
The numbers point the same way throughout: 446,000 new arrivals in 2024, a 60% apartment supply deficit, rents up 9% in a single year, and a $107 billion infrastructure plan reshaping the city. In Melbourne’s CBD, demand is outrunning supply, and the figures behind that gap raise the question of how long it can last.
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