Executive thesis
Why Melbourne is investable at a glance
Melbourne combines population growth, relative affordability, a diversified economy, education depth, infrastructure investment, global liveability and recovering CBD momentum. For foreign buyers, the opportunity is not every property — it is the right new, scarce or well-located asset aligned to buyer rules and long-term demand.
Australia macro
Australia has one of the strongest advanced-economy outlooks
Knight Frank’s analysis positions Australia ahead of other advanced economies on combined GDP and population growth outlook. This matters because property demand is ultimately driven by income, jobs, migration and household formation.
2.2%
Australia annual GDP growth forecast
Highest combined GDP and population growth outlook among advanced economies.
1.2%
Australia population growth forecast
Ahead of major advanced economy peers across 2026–2030.
28 yrs
Pre-pandemic positive growth streak
Australia’s economy showed long-term resilience with limited recessions since 1980.
3
Recessions since 1980
1981, 1990 and the COVID-19 downturn in 2020.
Population demand
Melbourne is outgrowing advanced-economy peers
Melbourne’s population has grown at an annual average pace of 1.8% since 2000. In the year to June 2025 it added approximately 123,500 residents — the largest annual increase of any Australian city — and is forecast to overtake Sydney by the 2030s.
Source: Knight Frank Research, IMF, Oxford Economics
5.5M
Melbourne population
2025 population base referenced in the Knight Frank report.
6.2M+
Forecast by mid-2030s
Melbourne is projected to move ahead of Sydney.
777
Modest net interstate loss
Compared with more than 24,000 for NSW.
2nd
Net overseas migration contribution
Behind NSW, but still a major driver of demand.
Education city
Melbourne’s student base is a property demand engine
Melbourne is ranked Australia’s #1 student city and fifth globally. It has the greatest concentration of higher-education students in Australia, including more than 201,000 international students — a major driver of rental demand, CBD activity and long-term city familiarity for foreign families.
#1
Student City in Australia
QS University Rankings 2025.
#5
Student City globally
Behind Munich, London, Tokyo and Seoul.
422,693
Higher-education students
Largest university-city concentration nationally.
201,202
International students
Supports rental depth and overseas buyer familiarity.
Source: Knight Frank Research, ABS; Victorian Government & ACARA
Infrastructure
More than $200B of transport investment supports future access
Major projects are improving the way Melburnians move across the city. For investors, infrastructure is important because it can change commute times, unlock precincts, deepen tenant pools and support future land values.
$200B
Expected Victorian Government transport infrastructure investment from 2014 to 2036.
$31.8B
Level Crossing Removal Stage 1
Delivered from 2014–2022 to reduce congestion and improve train reliability.
$10.0B
West Gate Tunnel
High-capacity alternative route to the CBD from Melbourne’s west, completed in 2025.
$15.6B
Metro Tunnel
New direct rail connection into the CBD, adding capacity of around 500,000 passengers per week.
$26.1B
North-East Link
Direct connection between the Eastern Freeway and M80, removing cross-city traffic pressure.
$100B
Suburban Rail Loop
Victoria’s largest infrastructure project, connecting universities, hospitals and employment nodes.
$15.6B
Airport Rail Link West
Long-awaited airport rail connection planned as part of the SRL West component.
Affordability
Melbourne is materially more affordable than Sydney
Knight Frank highlights that the cost to buy and rent housing in Melbourne is considerably cheaper than Sydney, Brisbane and Perth. Relative affordability matters for foreign buyers because it can improve entry price, rental competitiveness and long-term household demand.
Source: Knight Frank Research, Domain Q4 2025
$580
Median weekly unit rent
Indicative Melbourne point from Knight Frank chart.
$600K
Median unit dwelling price
Materially below Sydney’s unit pricing.
Cheaper
Than Sydney, Brisbane and Perth
For both buying and renting in key comparisons.
Entry
Better affordability lane
Useful for new apartments, townhouses and quality inner/middle-ring stock.
Housing supply
Victoria has dominated housing supply, but demand still matters
The report shows Victoria accounted for approximately 34% of completions across the five major capital city states from 2014 to 2024. Supply has helped affordability, but population growth, approvals, location quality and product type determine whether supply becomes opportunity or oversupply.
Source: Knight Frank Research, ABS
Foreign buyer interpretation
Do not treat all new supply equally. Foreign buyers should focus on projects where location, design, scarcity, rental depth, owner-occupier appeal and future resale demand are aligned. The strongest case is not simply “Melbourne has supply”; it is “Melbourne has demand, affordability and carefully selected new-stock pathways.”
Liveability and culture
Melbourne has the lifestyle magnetism that supports long-term demand
Melbourne has had the most appearances of any city in the top-10 global liveability index, supported by healthcare, education, stability, culture and infrastructure. Its food, wine and coffee culture adds emotional demand — the reason people want to live there, not just invest there.
Source: Knight Frank Research, Economist Intelligence Unit
3,500
Restaurants
More than 70 cuisines across the city.
3M
Coffees consumed daily
Coffee is part of Melbourne’s global identity.
699
Wineries across Victoria
Supports tourism, lifestyle and hospitality demand.
#1
Croissant in the world
A shorthand for global food culture and city branding.
Commercial confidence
Office and retail recovery strengthen the broader property story
Residential property is not isolated. Knight Frank’s report shows Melbourne’s CBD office rents remain more affordable than Sydney and Brisbane, effective rents returned to growth in 2025, and CBD retail vacancy has tightened as premium brands and shoppers return.
Source: Knight Frank Research
46%
Office rents cheaper than Sydney
Melbourne’s CBD remains a more competitive occupier market.
13%
Cheaper than Brisbane
A relative affordability advantage for occupiers.
4.0%
Prime effective rent growth in 2025
Strongest annual increase since before the pandemic.
6.5%
City retail vacancy tightening
Momentum returning to Melbourne CBD retail.
Solomon Bloom investor lens
What this means for foreign buyers
The Melbourne case is strongest when macro fundamentals are translated into property selection discipline. Foreign buyers should not buy Melbourne blindly — they should use the data to filter for the right asset.
1. Confirm eligibility
Foreign buyer rules, FIRB settings, surcharges and vacancy obligations must be checked before property selection.
2. Target the right stock
New, off-the-plan, townhouse or quality apartment assets must be tested for scarcity and resale depth.
3. Follow demand drivers
Education, transport, employment, lifestyle and population growth should support rental demand.
4. Stress-test the numbers
Model total acquisition costs, funding, currency movement, rent assumptions and exit strategy.