Melbourne set to overtake Sydney as Australia’s biggest city as property demand surges
Strong population growth, major infrastructure spending and comparatively affordable property are expected to cement Melbourne’s position as Australia’s most attractive long-term real estate market.
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Melbourne is poised to become Australia’s largest city within the next decade, with strong population growth, infrastructure investment and relative affordability driving long-term property demand.
A new research report from Knight Frank argues the Victorian capital remains one of the country’s most compelling markets for investors, businesses and residents.
The report highlights the city’s rapidly expanding population, diverse economy and major infrastructure pipeline as key factors underpinning future property growth.
Knight Frank Managing Director Victoria, Dominic Long, said Melbourne’s fundamentals continue to position the city strongly for long-term investment.
“Melbourne continues to stand out as one of Australia’s most compelling real estate markets,” he said.
“It is Australia’s strongest long-term growth city with the fastest growing population, the most diversified economy, world-class liveability and the most affordable major market for office, industrial and residential property.”
Population growth driving demand
Melbourne’s population has grown at an average rate of 1.8 per cent per year since 2000, faster than any advanced global economy, according to the research.
In the year to June 2025 alone, the city added about 123,500 residents, the largest annual increase of any Australian capital.
Population growth is expected to remain one of the key drivers of demand across residential and commercial property markets, including housing, offices and logistics space.
The report forecasts Melbourne’s population will overtake Sydney’s by the 2030s, reinforcing its position as the country’s fastest-growing major city.
Office market offering value
Melbourne’s CBD office market is also attracting renewed attention from investors.
Prime office rents remain significantly lower than in competing cities, with CBD office space about 46 per cent cheaper than Sydney and around 13 per cent cheaper than Brisbane.
That relative affordability is expected to drive long-term demand from occupiers and investors seeking value in Australia’s largest office markets.
The city’s office sector is also showing signs of recovery, with effective rents rising in 2025 and demand increasing for high-quality buildings in premium locations.
Industrial market benefiting from scale
Melbourne’s industrial sector continues to expand, supported by strong population growth, e-commerce demand and the scale of the city’s logistics network.
The city already hosts the country’s largest industrial market, with about 34 million square metres of warehousing stock and significant land available for future development.
Industrial rents remain competitive compared with other capitals, while Melbourne’s port handles the largest container volumes in Australia, further supporting demand for logistics space.
Infrastructure pipeline supporting growth
More than $200 billion in transport infrastructure investment between 2014 and 2036 is also expected to reshape the city and support future property values.
Major projects include the Metro Tunnel, the West Gate Tunnel, the North-East Link and the Suburban Rail Loop, which together will improve connectivity across Melbourne and its growth corridors.
Knight Frank’s Head of Research & Consulting, Victoria, Dr Tony McGough, said these investments would play a key role in supporting the city’s economic expansion.
“Melbourne is Australia’s most economically diverse city and has delivered stable growth for more than two decades,” he said.
“With strong population growth, a highly educated workforce and unprecedented infrastructure investment, Melbourne is well placed to remain one of Australia’s most attractive long-term property markets.”
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Set on one of the city’s last absolute riverfront sites, The Riversdale by Mosaic combines irreplaceable waterfront ownership with one of Brisbane’s most significant residential opportunities.
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Abadeen, the Lower North Shore’s most active and prominent residential developer, together with investment partner Phoenix Property Investors, has lodged a State Significant Development Application to transform the former Honeysuckle Garden and Midas site on Military Road into 100 premium new homes.
With an estimated completed value of $230 million, the proposed development will transform the former Honeysuckle Garden and Midas site into a landmark mixed-use residential community comprising 100 premium residences, activated ground-floor retail and a resort-style rooftop wellness and recreation precinct designed to become one of the Lower North Shore’s most exceptional resident amenities.
The proposal has been carefully designed to respond to the site’s varied street frontages and surrounding neighbourhood. The building comprises predominantly five and nine storeys, steppingdown towards Hale Road to reduce its visual impact, with the tenth level rooftop
wellness facilities rather than residential apartments. This built form remains below the 12-storey outcome identified through Mosman Council’s recently endorsed Masterplan process, demonstrating a considered approach to delivering much-needed housing while respecting the site’s context and neighbouring properties.
Designed by leading Australian practice DKO Architecture, under the direction of Senior Associate Matthew Ritchard, the proposal has been conceived as a contemporary response to Mosman’s unique landscape, history and community.
Occupying a prominent position on Military Road between Cremorne and Mosman villages, the site is close to boutique retail, acclaimed dining, harbour beaches, leading schools and excellent public transport connections. Upper-level residences would enjoy panoramic views stretching north across Middle Harbour, south to the Sydney CBD skyline, east to Balmoral and Sydney Heads, and west across the Lower North Shore.
Abadeen Executive Chairman Justin Brown said the project represented an opportunity to deliver a new generation of homes for Mosman that responded to changing buyer needs while remaining respectful of the suburb’s established character.
“This is one of the most significant sites to come to market on the Lower North Shore in many years,” Brown says.
“The apartments have been designed as genuine long-term homes, with efficient floor plans that maximise usable living areas, generous internal storage, strong natural light and practical connections between internal and external spaces. A diverse range of apartment sizes and configurations provide greater housing choice for individuals, couples, families and local downsizers.
“The focus has been on creating homes that caters for a broad range of buyers, from young professionals purchasing their first home, to couples establishing themselves, growing families and local downsizers who want to remain in Mosman.”
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