Melbourne is on track to overtake Sydney as Australia’s largest city by 2035, creating opportunities for property investors.
JLL Australia’s Melbourne Resilience 2025 report, drawing on Oxford Economics research, forecasts the Victorian capital will add 840,000 new residents over the next decade, realestate.com.au reported.
The trend is already underway, with ABS figures showing Victoria added 124,600 residents to March, the strongest growth nationally. Interstate migration has also turned positive for the first time since the pandemic.
JLL’s head of strategic research, Annabel McFarlane (pictured), said the city’s population surge was underpinning property demand.
“Melbourne’s population growth is driving demand for homes, offices, transport, and infrastructure,” McFarlane said.
“On current trends, it’s set to become Australia’s biggest city by 2035, adding more residents than global cities such as New York and Tokyo. From a property market perspective, we’re already seeing investors look past today’s economic and regulatory pressures, positioning themselves for Melbourne’s growth.”
While large investors are leading the charge, smaller buyers are expected to follow.
JLL residential research manager Will Silk said Melbourne’s affordability compared with Sydney was proving a key drawcard.
“Melbourne’s affordability compared with Sydney and its strong growth outlook are already drawing increased interest from both local and international buyers,” Silk said.
“As activity from larger investors builds momentum, mum-and-dad investors are likely to follow, recognising the long-term opportunity for capital growth and stable returns.”
He added that keeping up with demand would be a continuing challenge.
“Victoria has led the way nationally in new housing completions, but rapid population growth means demand will continue to outpace supply,” Silk said.
“Attracting both onshore and offshore capital into a diverse range of housing solutions is essential. This will not only ease supply pressures but also ensure the state remains well-placed to accommodate its growing population and support economic growth.”
Strong rental growth and modest price rises have lifted Melbourne’s yields, making them more attractive to investors. Housing development remains well below historical averages, suggesting conditions could tighten further.
While affordability remains stretched nationally, demand-side stimulus such as this year’s series of rate cuts and the October expansion of the Home Guarantee Scheme will intensify competition — with momentum shifting back to Melbourne and Sydney.
JLL’s report also points to supply gaps in both apartments and retail property, providing potential upside for investors who enter early.
The report highlights Melbourne’s position as Australia’s largest logistics and industrial hub, with more than 30m sqm of space. Since 2020, 1.5m sqm has been taken up by manufacturing tenants — more than Sydney and Brisbane combined.
Lower land prices, combined with major investment in AI and data centres, are also supporting growth. Victoria’s power costs and more streamlined approvals add to the state’s competitiveness.
JLL’s head of capital markets in Victoria, Josh Rutman, said momentum was building.
“The overwhelming feedback is that Melbourne is too hard to ignore given the size of market and the ideal mix of value, sector resilience and long-term growth,” Rutman said.
Victoria also leads the nation in build-to-rent delivery, with 3,505 units completed in 2025 and another 2,154 expected this year.
Silk said more traditional markets, such as office, were also offering opportunities.
“For Melbourne more broadly, the city is currently offering excellent relative value compared with Brisbane and Perth, positioning it for strong upside as demand builds,” he said.
“As new developments reach completion and supply pressures become clearer, prices are likely to rebound quickly. While the exact timing is difficult to predict, the fundamentals point to a quicker and accelerating recovery as momentum builds.”
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