• Values of Inner-City apartments appear to have stabilised, however values remain lower than they were 12 months earlier;
• With 1,400 new apartments completed in the Inner-City Melbourne market over 2025 to date, this year is on track to the lowest year of supply since 2008;
• Transactional activity for apartments in the Inner-City region in 2025 has been strong this year with more than 5,200 sales recorded so far, a decade high.

Inner-City Melbourne Apartment Summary

2025 is set to the lowest year of new Inner-City apartment supply since 2008 with 1,400 new apartments have been completed so far. The vast majority of the pipeline of new apartments for the Inner-City currently under construction are within the build-to-rent sector with the bulk of the apartments located in the Docklands, followed by Southbank. Values of Inner-City apartments appear to have stabilised, however remain lower than they were 12 months earlier. Transactional activity for apartments in the Inner-City region this year has been strong with more than 5,200 sales recorded, a decade high.

Prices

Values of Inner-City apartments appear to have stabilised, however values remain lower than they were 12 months earlier. According to the REIV, over the September quarter Inner-City apartments prices increased by 0.3% to $599,000, however values remain lower than they were at September 2024. Over the 12 months to September 2025, values of 1-bedroom, 2-bedroom and 3-bedroom Inner-City apartments all declined. Values of 2-bedroom Inner-City apartments declined by 0.3% to $630,000 with median prices of 3-bedroom apartments falling by 0.7%. Prices of 1-bedroom apartments declined by 2% over the year to September 2025 according to the. With a solid rental growth outlook coupled with a constrained pipeline, Urban Property projects that, given a favourable rental growth outlook and limited new supply, the values of Melbourne Inner-City apartments are expected to experience gradual increases in the near term.

Supply

Over the past 20 years, on average, there have been 3,600 new apartments delivered to the Inner-City Melbourne market each year. Most of the pipeline of new apartments for the Inner-City currently under construction are within the build-to-rent sector in contrast to the built-to-sell sector. Currently there are 6,600 apartments under construction within the Inner-City Melbourne region. Urban Property Australia research recorded 1,400 new apartments completed in the Inner-City Melbourne market over 2025 to date, with the outlook for annual completions of new Inner-City apartments this year on track to the lowest year of supply since 2008. Of the 35 new developments currently under construction, 41% of the apartments are in the Docklands, followed by 36% located in the Southbank precinct and 10% in Kensington. Looking ahead, while there are a further 21,000 apartments with plans approved in the Inner-City Melbourne region. According to research by Urban Property Australia, the supply of new apartments in Inner-City Melbourne is expected to stay lower than the usual annual average over the next five years. This trend continues despite near-record population growth, as rising construction costs and ongoing labour shortages make new developments difficult.

Inner Melbourne New Apartment Supply

Demand

Transactional activity for apartments in the Inner-City region in 2025 has been strong to date with more than 5,200 sales recorded and is on track to be the most active year since 2016. The bulk of transactions were focused on Southbank and CBD-Core located apartments which collectively accounted for 56% of all sales followed by those located in the Docklands and Carlton which accounted for 10% and 8% respectively of the total Inner-City apartments sold in 2025 to date. Looking ahead, Urban Property Australia’s research forecasts that Inner-City apartment transactions will likely rise due to strong investor demand and record-high rents, though growth could be limited by the low level of new apartments in development.

Vacancy

Although the Inner-City’s residential population has started to rebound after declines over the past few years, it still hasn’t reached its peak numbers from 2020. According to the REIV, as at September 2025, the residential vacancy rate for the Inner-City precinct (0-4km radius of the GPO) was 2.4%, having decreased over the past 12 months, aided by the limited supply pipeline. Looking ahead, with new development continuing to remain difficult to progress to construction phase, Urban Property forecasts that the vacancy rates for the Inner Melbourne precinct will continue to remain below its long-term average of 3.3%.

Inner Melbourne Residential Vacancy & Rents

Rents

Due to a persistently low vacancy rate and a constrained development pipeline, apartment rents in Inner Melbourne are once again approaching record-high levels. As at September 2025, median Inner Melbourne apartment rents were $595 per week, having increased by 6.3% over the year, according to the REIV. Over the year to September 2025, average rents for all sized-bedroom apartments in the Inner-City precinct rose by at least 4%, interestingly led by 3-bedroom apartments which increased by 6.3% over the year. Rents for 1-bedroom Inner Melbourne apartment rents increased by 5.3% over the year with rents for 2-bedroom apartments increasing by 4.1% over the year. Although Inner Melbourne rents are close to all-time highs, Urban Property Australia forecasts further rental growth boosted by the growing employment levels in the CBD and the rising international student population which again has accelerated in recent months.

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