• Inner Melbourne apartment rents currently sit just below all-time high levels having increased by 4.3% over the year, led by rental growth recorded in 1-bedroom apartments;
• The residential vacancy rate for the Inner-City precinct was 2.8%, having increased over the past 12 months, despite the limited supply pipeline;
• Transactional activity for apartments in the Inner-City region has been strong in 2025 to date with more than 3,000 sales recorded over the first half of 2025 and is on track to be the most active year in the past 10 years.

Inner-City Melbourne Apartment Summary

Transactional activity for apartments in the Inner-City region in 2025 has been surprisingly strong to date with more than 3,000 sales recorded over the first half of 2025, on track to be the most active year in the past 10 years. Most transactions were focused on Southbank and CBD-Core located apartments which collectively accounted for 55% of all Inner Melbourne apartment sales. While values of Inner-City apartments continue to recover from their trough, values remain lower than they were 12 months earlier.

Prices

While values of Inner-City apartments continue to recover from their trough, values remain lower than they were 12 months earlier. According to the REIV, over the June quarter Inner-City apartments prices increased by 0.3% to $595,000, however values remain lower than they were at June 2024. Over the 12 months to June 2025, values of 1-bedroom, 2-bedroom and 3-bedroom Inner-City apartments all declined. Values of 2-bedroom Inner-City apartments declined by 0.8% to $627,000 with median prices of 1-bedroom apartments falling by 1.6%. Prices of 3-bedroom apartments declined by 3.0% over the year to June 2025 according to the REIV having outperformed other apartments in recent years. With solid rental growth coupled with a constrained pipeline, Urban Property forecasts that the values of Melbourne Inner-City apartments will continue to trend up with modest growth projected in the short term.

Supply

Currently there are 6,900 apartments under construction within the Inner-City Melbourne region. Urban Property Australia research recorded 400 new apartments completed in the Inner-City Melbourne market over the first half of 2025, with the outlook for annual completions of new Inner-City apartments this year on track to the lowest year of supply since 2008. Over the past 20 years, on average, there have been 3,600 new apartments delivered to the Inner-City Melbourne market each year. The vast majority 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. Of the 42 new developments currently under construction, 46% of the apartments are located in the Docklands, followed by 30% in Southbank and 11% in North Melbourne. Looking ahead, while there are a further 22,000 apartments with plans approved in the Inner-City Melbourne region, Urban Property Australia’s research forecasts that new apartment supply in the Inner-City Melbourne precinct is projected to remain below the average annual levels for the next five years despite the near all-time record population growth with elevated construction costs and labour shortages continuing to challenge new development.

Inner Melbourne New Apartment Supply

Demand

Transactional activity for apartments in the Inner-City region in 2025 has been surprisingly strong to date with more than 3,000 sales recorded over the first half of 2025, on track to be the most active year in the past 10 years. Most transactions were focused on Southbank and CBD-Core located apartments which collectively accounted for 55% of all sales followed by those located in the Docklands and Carlton which accounted for 11% and 9% of total Inner-City apartments sold in 2025 to date respectively. Looking ahead, Urban Property Australia’s research forecasts that the transactional activity of the Inner-City apartment market will continue to strengthen as investor demand gathers momentum buoyed by the all-time high rental levels but may be moderated by the limited pipeline of new apartments.

Vacancy

While the Inner-City’s residential population has begun to recover the losses it suffered in recent years, its population remains below the all-time high recorded in 2020. According to the REIV, as at June 2025, the residential vacancy rate for the Inner-City precinct (0-4km radius of the GPO) was 2.8%, having increased over the past 12 months, despite the limited supply pipeline. Looking ahead, despite a slight increase in vacancy over the past year, Urban Property forecasts that the vacancy rates for the Inner Melbourne precinct will continue to remain below its long-term average of 3.3% as employment in the CBD picks up, international students return coupled with a relatively constrained pipeline of new apartments.

Inner Melbourne Residential Vacancy & Rents

Rents

With the vacancy rate still below the long-term average coupled with the limited development pipeline, Inner Melbourne apartment rents are once again nearing all-time high levels. As at June 2025, median Inner Melbourne apartment rents were $600 per week, having increased by 4.3% over the year, according to the REIV. Over the year to June 2025, average rents for all sized-bedroom apartments in the Inner-City precinct rose by at least 3%, somewhat led by 1-bedroom apartments which increased by 4.2% over the year. Rents for 2-bedroom Inner Melbourne apartment rents increased by 4.0% over the year with rents for 3-bedroom apartments increasing by 3% 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 numbers.

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