Melbourne has weathered its share of property cycles. But the fundamentals pointing towards renewed investor interest are now stronger than they've been in years.
After several uneven years, Victoria is forecast to be the second fastest-growing state in the country, behind Western Australia, according to the Centre for Population. Average annual population growth is expected to sit around 1.4 per cent over the next decade. Most of that growth will land in Melbourne, driven primarily by net overseas migration.
For buyers weighing their next property move, understanding these demographic shifts isn't just academic – it shapes where demand will flow and where opportunities will emerge.
Melbourne’s growth story is back on track
Victoria’s population is projected to rise from around 7.07 million in 2024-25 to more than 7.37 million by 2027-28. Greater Melbourne alone is expected to grow from 5.44 million to 5.70 million over the same period.
Looking further ahead, Melbourne’s population is projected to reach approximately 9.1 million by 2065-66. That is a material increase in people needing somewhere to live, work and raise families.
The key driver is overseas migration. Victoria is expected to welcome 91,300 overseas migrants in 2024-25, with 84,000 of those settling in Melbourne. Even as these figures moderate slightly in subsequent years, overseas migration remains the dominant force behind the city's expansion.
Interstate migration plays a smaller but still considerable role. Melbourne continues to see a modest net outflow of residents each year, though far less pronounced than Sydney’s. Regional Victoria attracts more internal movers, but not at a scale that offsets Melbourne’s overseas inflows.
For property markets, the takeaway is straightforward. Even with some residents leaving for lifestyle reasons, the city’s population base keeps expanding.
Why this matters for property investors
Population growth doesn't just mean more people – it means more households, more demand for housing and upward pressure on both rents and property values over time.
But population growth does not translate evenly into housing demand. The type of migrants, their age and household structure all matter.
As the Centre for Population graph below shows, permanent migrants and New Zealand citizens have average dwelling demand broadly in line with that of Australian citizens. Many arrive as couples or families, forming independent households rather than sharing accommodation long-term.
On the other hand, temporary migrants, such as international students and working holiday makers, typically have lower immediate dwelling demand. They are more likely to live in group households or non-private accommodation. Over time, however, many transition into permanent residency.
As migrants move through life stages, housing demand increases. People in their late twenties and thirties are more likely to form new households, whether as couples, families or single occupants. This is the same age range where Melbourne sees strong employment participation in professional services, health, education and technology.
For investors, this progression is an important factor when looking for quality tenants. It supports demand not only for entry-level rentals, but also for family homes, townhouses and well-located apartments close to jobs and schools.
Pressure builds when supply lags demand
Population growth alone does not push prices higher. It does so when housing supply fails to keep pace.
Victoria has delivered more new housing than most states, particularly detached homes. Australian Bureau of Statistics data shows Victoria has consistently led the country in new house completions over the past decade, often recording between 8,000 and 10,000 new houses per quarter across all sectors. Over the last decade, Victoria has outbuilt all other capitals.
The picture changes when apartments and townhouses are included. Total dwelling completions in Victoria have been far more volatile, reflecting the stop-start nature of higher-density construction. While detached housing has remained relatively resilient, apartment delivery has fluctuated sharply in response to financing conditions, construction costs and developer confidence.
This matters because a large section of population growth in Melbourne is absorbed through higher-density housing. Overseas migrants and younger households often settle in apartments or townhouses close to employment centres, universities and transport. Yet the data shows that growth in total dwelling completions has not kept pace with the state’s strong house-building record.
Additionally, in the last year, both segments have softened. Victoria recorded more than 10,600 new houses in the June 2024 quarter, but completions eased back through late 2024 and 2025. Total dwelling completions followed a similar pattern, peaking and then retreating as projects were delayed or shelved. By September 2025, total new dwellings completed in Victoria had fallen below earlier cycle highs, despite population growth accelerating again.
Where opportunity meets strategy
Melbourne’s population growth is creating a window for strategic investors. When supply tightens, rental markets usually feel the impact first. Strong population growth combined with uneven new dwelling delivery places upward pressure on rents, particularly for well-located apartments and family-sized homes close to schools and transport. Over time, higher rents can support investor returns and underpin price growth.
This is where opportunity meets strategy: understanding which property types are in demand and where households are forming allows investors to make informed decisions rather than following broad market trends. Properties that align with the needs of younger professionals, migrants and families – particularly apartments and townhouses in established corridors – may offer more consistent cash flow and long-term growth potential.
By positioning portfolios to match population-driven demand, investors can capture both income today and capital appreciation tomorrow, turning Melbourne’s population growth into a tangible advantage.
A smart finance strategy
Population projections don't guarantee property returns – market conditions, interest rates and supply dynamics all play crucial roles. However, demographic tailwinds do create a foundation for sustained demand.
This is where tailored mortgage advice makes a difference. A well-structured loan strategy can help you:
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Access equity without overextending cash flow
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Separate personal and investment debt for clarity and tax efficiency
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Choose loan features that support flexibility as your family and portfolio evolve
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Plan for future upgrades or other commitments
For buyers, the value lies in coordination. Lending decisions should align with your broader goals, not just the next purchase.
If you would like support reviewing how population growth trends intersect with your borrowing capacity and property plans, get in touch with AXTON Finance today. Call 03 9939 7576, email getabetterrate@axtonfinance.com.au or contact us today.