
Melbourne apartment supply to experience a ‘cyclical trough’ this year
Less than 2,000 units are expected to be completed in 2025.
Melbourne’s apartment supply is projected to record a cyclical trough in 2025 supporting market balance, according to a JLL report. Just 250 apartments will be completed in 2025 and 1,907 anticipated completions for the rest of the year.
“2025 is projected to record just over 2,150 units in inner Melbourne, half the annual average of the last 10 years,” the report said.
Here’s more from JLL:
Melbourne’s apartment market continues to lag other geographies with further average price falls in recent months and -0.3 price growth recorded for the year.
New rental protection laws passed through the Victorian Parliament in March 2025 and are weighing on investor confidence resulting in subdued market conditions. Melbourne’s detached house market has remained largely flat.
More moderate supply should support rents and prices over the medium-term
The rental market remains tight, and rents continue to grow. Limited new BTS investor stock and BTR supply has supported strong rental growth over the year of 8.9% y-y.
However, new rental protection laws are likely to provide limited relief to the market in the context of limited new supply of investor stock.
Outlook
Financial pressures on households and borrowing capacity will likely keep the recovery of apartment demand muted in the short-term. Anticipated moves by the RBA to reduce the cash rate once or twice through the remainder of the year will support buyer confidence. Over the medium-term the strength of underlying demand growth from strong population inflow and continued low levels of new supply will see market balance continue to swing towards an under-supply.
With little supply relief for the already tight rental market, upward pressure on rents are likely to continue for some time yet. Existing apartment price growth should also gain momentum over the medium term as market balance swings and as build-costs push pricing of new stock.