By 2040, Melbourne is expected to hold 7.
45 million people, and the city is forecast to overtake Sydney by 2032 to become the largest in Australia. Those projections anchor the Melbourne CBD Market Outlook 2025, a report built around four drivers for buying apartments in the central business district, or CBD: population growth, public investment, rental demand, and a stable national economy. The report adds that judging the opportunity well requires a firm grasp of local market fundamentals, financial planning, and broader economic trends.
Far East Consortium, described as one of Australia’s most respected Melbourne property developers, commissioned the document and engaged the firm Urbis to write it. The aim was to explain how Melbourne’s property market works, what shapes buyers’ decisions, and what the economy looks like for 2025 and beyond.
The first driver is people. Immigration has powered steady growth over the past decade, and in 2024 alone Melbourne received 446,000 new overseas arrivals. Housing is under pressure as a result. The City of Melbourne estimates it needs 21,600 more dwellings by 2028, yet the apartment pipeline is expected to deliver just 8,900, a shortfall of 60%. The report treats that gap between need and construction as evidence of substantial room for price growth and rental returns on CBD apartments. It also stresses that anyone building long-term wealth through property must understand demographic shifts.
The second driver is public spending, and five projects stand out. Together they are raising Melbourne’s liveability and its standing with investors.
The Melbourne Greenline, scheduled for 2025, is a $224 million project that will reshape public spaces along the Yarra River and create a 4-kilometer route with more recreation and event opportunities. The West Gate Tunnel Project, also due in 2025, is a major road upgrade that gives drivers an alternative to the West Gate Bridge, eases congestion, and Improves links between Melbourne’s west and the CBD. The North East Link, planned for 2028, is the largest road project in Victoria’s history. It will connect key arterial roads across Melbourne’s north and east, shorten travel times, and support urban growth across the region. The Queen Victoria Market Renewal, set for 2029, is a $268 million revitalization of one of the city’s best-known landmarks, bringing new public spaces, restaurants, and activities meant to attract residents and visitors alike. The Suburban Rail Loop, slated for 2035, will link key suburbs and cut commute times, and it is also expected to lift housing demand near transport hubs such as Clayton and Sunshine.
All five fall under Victoria’s $107 billion infrastructure plan. According to the report, the plan strengthens Melbourne’s global appeal and pushes long-term property values higher. For discerning investors, it adds, living near these transport networks goes hand in hand with stronger tenant retention and sustainable capital appreciation.
Why do apartments in particular perform so well? Price is a major factor. In 2024, the median price of a CBD apartment sat 56% below that of a detached house. That gap opens the door to buyers chasing high rental yields, and it shows one advantage of buying an apartment instead of land.
The third driver, rental demand, tells a similar story. Median weekly rent in the CBD rose to $750 in November 2024, up from $690 in 2023, a 9% increase year over year. Vacancy stayed tight, averaging 2.4% through 2024. Newly built CBD apartments delivered gross rental yields of 4.8%, which adds to their appeal for investors.
Supply is the other side of the equation. Land available for new development inside the CBD grid is running short, so existing apartments are expected to see significant capital appreciation. The report notes that limits on new supply should lift capital values while demand continues to outpace 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 example.
The fourth driver is the national economy. Strong fundamentals across Australia underpin Melbourne’s property market. In late 2024, unemployment stood at 4.0%, well below the 10-year average of 5.3%, a sign of an economy that has proved resilient. Consumer confidence has rebounded too: the ANZ-Roy Morgan Index climbed 12 points year over year to reach 86.4 in December 2024. Inflation fell to 2.8% in September 2024. The report says better sentiment combined with easing prices has produced a favorable climate for property investment and for wealth management advisory services.
Interest rates are expected to lend further support. Major banks, including ANZ and NAB, forecast rate cuts that should lower borrowing costs and spur 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%. The report says this would Improve affordability further for investors who rely on mortgage broker services or commercial real estate loans.
Pulling these threads together, the report describes Melbourne CBD as offering a rare mix of rapid population growth, transformative infrastructure, and strong rental performance, which it calls an exceptional investment opportunity. The scarcity of new development within the CBD grid strengthens the case, since existing apartments are positioned for capital growth. The report adds 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 a portfolio stays aligned 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.
The numbers point in one direction: 446,000 overseas arrivals in 2024, a 60% gap between dwellings needed and dwellings planned, rents up 9% in a single year, and a $107 billion infrastructure plan still reshaping the city. Whether that combination keeps producing growth for CBD apartment owners is a question the market will answer in the coming years.
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