• Led by 3-bedroom apartments, values of Inner-City apartments continue to improve, with median apartment values having increased by 2% over the year, rising to $609,500;
• With the Inner City’s population surpassing 190,000 residents, the residential vacancy rate for the Inner-City precinct remains tight with its current rate at 3.0%;
• Underpinned by the low vacancy rate and constrained development pipeline, median Inner Melbourne apartment rents currently sit just shy of the record highs, led by rental growth of 1-bedroom apartments.

Inner-City Melbourne Apartment Summary

Currently there are 7,000 apartments under construction within the Inner-City Melbourne region with most new apartments based in the Docklands and Southbank however this pipeline equates to 36% lower than average levels despite rents approaching all-time highs. Buoyed by the constrained pipeline and growing rents, transactional activity for apartments in the Inner-City region in 2026 has been strong to date with more than 1,570 sales recorded and is on track to an above-average year for sales volume boosted by an increasing investor appetite.

Prices

Similar to the broader Melbourne residential market, values of Inner-City apartments continue to improve, having increased for four consecutive quarters. According to the REIV, over the March 2026 quarter Inner-City apartments prices increased by 1.4% to $609,500, however values remain lower their peak of December 2021. Over the 12 months to March 2026, median values of 1-bedroom, 2-bedroom and 3-bedroom Inner-City apartments all increased. Inner-City 3-bedroom apartments led the annual growth rates, having recorded median value growth of 4.5% over the 12 months to March 2026, up to $1.15 million. Values of 1-bedroom Inner-City apartments increased by 2.9% to $386,000 with median prices of 2-bedroom apartments rising by 1.1% over the year. With a solid rental growth outlook coupled with a constrained pipeline, Urban Property projects that values of Melbourne Inner-City apartments are expected to continue trend upwards 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 7,000 apartments under construction within the Inner-City Melbourne region. Of the 30 new developments currently under construction, 46% of the apartments are in the Docklands, with a further 26% of apartments under construction located in Southbank and 11% of the total volume of apartments under construction based in North Melbourne. While Urban Property Australia research recorded 3,400 new apartments completed in the Inner-City Melbourne market over 2025, a pick up in completions, looking ahead the pipeline is projected to decrease to 15-year lows. Beyond the apartments currently under construction, there are a further 22,100 apartments with plans approved in the Inner-City Melbourne region, however Urban Property Australia projects that the supply of new apartments in Inner-City Melbourne is expected to remain lower than the usual annual average over the next five years.

Inner Melbourne New Apartment Supply

Demand

Transactional activity for apartments in the Inner-City region in 2026 has been strong to date with more than 1,570 sales recorded and is on track to an above-average year for sales volume. The bulk of transactions were focused on Southbank and CBD-Core located apartments which collectively accounted for 51% of all sales followed by those located in the Docklands and Carlton which accounted for 13% and 10% respectively of the total Inner-City apartments sold in 2026 to date. Looking ahead, Urban Property Australia’s research forecasts that Inner-City apartment transactions will likely rise due to strong investor demand – with investor finance currently at 20-year highs coupled with rents close to all-time highs, though growth could be limited by the low level of new apartments in development.

Vacancy

With the Inner City’s population surpassing 190,000 residents, the precinct has now exceeded pre-pandemic levels. Despite the constrained pipeline, projections suggest the population of the Inner-City will likely exceed 230,000 residents by 2031. According to the REIV, as at March 2026, the residential vacancy rate for the Inner-City precinct (0-4km radius of the GPO) was 3.0% having tightened to 2.3% in October 2025 before rising with new apartments delivered to the market. 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%.

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 March 2026, median Inner Melbourne apartment rents were $625 per week, having increased by 4.2% over the year, just shy of the record high of $650 per week achieved in February 2026, according to the REIV. Over the year to March 2026, average rents for all sized-bedroom apartments in the Inner-City precinct rose by at least 3%, interestingly led by 1-bedroom apartments which increased by 4.0% over the year. Median rents for 1-bedroom Inner Melbourne apartment rents increased to $520 per week with rents for 2-bedroom apartments increasing by 3.8% over the year and 3-bedroom apartment median rents increasing by 2.9% 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 projected resident population of the Inner-City region in coming years.

Inner Melbourne Residential Vacancy & Rents

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