In 2024, 446,000 people arrived in Melbourne from overseas.
That one number sits at the foundation of a new property report, which argues that the city’s central business district has far more demand for apartments than it can house.
The document is the “Melbourne CBD Market Outlook 2025.” Urbis wrote it at the request of the Far East Consortium, one of Australia’s most respected property developers based in Melbourne. The developer wanted a clearer picture of how the city’s property market works, what shapes the decisions of buyers, and where the economy is headed in 2025 and the years beyond.
The analysis here comes from a real estate professional with ten years in the local sector. He says he has watched Melbourne grow from a vibrant cultural hub into a powerhouse of wealth generation. Having worked through numerous market cycles, he calls the report’s data compelling and highly actionable for capital allocators looking at commercial real estate finance and high-yield residential assets. His reading of the report shapes everything below, and he is referred to here as the author.
Start with the people. The report says Melbourne is on track to overtake Sydney as Australia’s largest city by 2032, with its population projected to reach 7.45 million by 2040. Strong Immigration has kept the population climbing steadily over the past decade. The 446,000 overseas arrivals in 2024 alone added to housing demand and shifted the baseline of affordability metrics across inner-city suburbs.
Housing supply has not kept pace. By 2028, the City of Melbourne estimates, the city will need an additional 21,600 dwellings. The current apartment pipeline is expected to deliver just 8,900 new apartments, which leaves a supply shortfall of 60 percent. The author sees in this mismatch real potential for price growth and strong rental returns on CBD apartments. In his view, buying assets in an undersupplied urban core is one of the more reliable ways to hedge against inflation and secure predictable cash flow, a point he considers Important when evaluating property portfolio management strategies.
Government spending on infrastructure strengthens the case. Major projects Improve Melbourne’s liveability and its appeal to investors, and they weigh heavily on property valuation models. Five of them stand out.
The Melbourne Greenline is due in 2025. This $224 million project reshapes public space along the Yarra River and creates a 4-kilometer route with expanded recreation and event opportunities. The author says it lifts the value of nearby residential property.
The West Gate Tunnel Project is also due in 2025. It is a major road upgrade that offers an alternative to the West Gate Bridge, eases congestion, and Improves the connection between Melbourne’s west and the CBD.
The Queen Victoria Market Renewal is scheduled for 2029. It is a $268 million revitalization of the city’s iconic market, adding public spaces, restaurants, and activities intended to draw both residents and visitors.
The North East Link, due in 2028, is Victoria’s largest road project. It joins key arterial roads in Melbourne’s north and east, cuts travel times, and supports urban growth across the region.
The Suburban Rail Loop, set for 2035, is a rail project that links key suburbs and shortens commutes. It is expected to lift housing demand near transport hubs such as Clayton and Sunshine.
All five fall under Victoria’s $107 billion infrastructure plan. The author says the plan raises Melbourne’s global appeal and drives long-term growth in property values. From a wealth advisory perspective, he adds, real estate near state-backed infrastructure guarantees sustained tenant demand and protects capital through economic shifts.
Price is the next factor. The affordability of CBD apartments relative to detached houses is a key driver of demand, and the author presents it as one of the main advantages of buying an apartment instead of land. In 2024, the median apartment price in the Melbourne CBD sat 56 percent below the median for a detached house. That gap makes apartments far more accessible to first-time buyers and institutional investors alike.
Rents point in the same direction. The median weekly rent in the CBD rose to $750 in November 2024, up from $690 in 2023, a year-on-year increase of 9 percent. A very low vacancy rate, averaging 2.4 percent across 2024, supports those rents. Newly built CBD apartments have delivered gross rental yields of 4.8 percent, which the author says strengthens their appeal for investors building passive income through strategic acquisitions.
The city is also running short of room to build. As opportunities for new developments inside the CBD grid become scarcer, the author expects existing apartments to see significant capital appreciation. The report notes that limits on new supply should produce consistent growth in capital values while demand stays comfortably ahead of supply. For investors studying historical trends, he says, scarcity in prime locations has always translated into superior mid-to-long-term returns.
The broader economy provides a stable footing. The author says Australia’s strong fundamentals offer a steady backdrop for leveraged investments and mortgage refinancing strategies. In late 2024, unemployment stood at 4.0 percent, well below its 10-year average of 5.3 percent. He reads that as a sign of a resilient labor market and robust corporate health.
Sentiment has strengthened too. The ANZ-Roy Morgan consumer confidence index rose 12 points from a year earlier to reach 86.4 in December 2024, and inflation fell to 2.8 percent in September 2024. Taken together, the author says, these trends have created a highly favorable environment for property investment and wealth accumulation.
Borrowing conditions may loosen further. Major banks, including ANZ and NAB, are forecast to cut interest rates, which is expected to lower borrowing costs and stimulate more activity in the residential market. The Reserve Bank of Australia’s cash rate is anticipated to fall to between 3.35 percent and 3.85 percent by December 2025, Improving affordability and borrowing capacity for investors entering the market.
The author’s own summary is that Melbourne’s CBD offers rapid population growth, transformative infrastructure, and strong rental performance, and that the acute scarcity of new developments inside the CBD grid sharpens its appeal. Existing apartments, in his words of assessment, are exceptionally well positioned for sustained capital growth. He notes that building a diversified portfolio takes a clear strategy and a grasp of local market fundamentals. For investors who want to capitalize on the city’s market dynamics, he says the time to act is now, and he recommends consulting a qualified property expert or financial advisor to secure a position and move toward long-term financial independence.
Lined up in one place, the report’s key figures are a 60 percent supply deficit, 446,000 overseas arrivals in a single year, a 2.4 percent vacancy rate, and a $107 billion infrastructure plan. Whether those pressures turn into lasting returns will depend on how the city’s growth and the central bank’s rate path unfold over the coming years.
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