Melb population boom tip for mum and dad investors

Melbourne is on track to overtake Sydney to become Australia’s largest city once more.

Mum and dad investors are likely to follow larger buyers looking to reap predicted capital gains from a surge in Melbourne’s population in the next decade.

Melbourne is on track to overtake Sydney as Australia’s largest city once more, research quoted in JLL Australia’s Melbourne Resilience 2025 report shows.

The Oxford Economics research predicts the Victorian capital will add another 840,000 people over the next 10 years.

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New Australian Bureau of Statistics population data reveals the trend is underway, with Victoria leading the nation for growth to March 2025, adding 124,600 residents, with the state in positive interstate migration for the first time since the Covid pandemic.

Forecast supply gaps in apartments and retail property provides better conditions to invest in the state, the report shows.

Strong rental growth and tepid price growth has seen Melbourne yields become much more attractive to buyers, with new housing development also remaining well below historical averages.

JLL Australia Head of Strategic Research Annabel McFarlane said Melbourne’s population growth is driving demand for homes, offices, transport, and infrastructure.

JLL Australia’s head of strategic research Annabel McFarlane said property investors were already positioning themselves to capitalise on the growth, despite the state’s higher regulatory costs to investors.

“Melbourne’s population growth is driving demand for homes, offices, transport, and infrastructure,” Ms 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.”

JLL residential research manager Will Silk said Melbourne’s long-term fundamentals were strong, with prices sitting below historic trends presenting attractive value compared to other capitals.

“Melbourne’s affordability compared with Sydney and its strong growth outlook are already drawing increased interest from both local and international buyers,” Mr Silk said.

Despite a strong recent pipeline, the supply of new apartments is predicted to be low over the next few years. Picture: NCA NewsWire/David Crosling

“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.”

But keeping up housing supply will remain a challenge without significant and ongoing investment.

“Victoria has led the way nationally in new housing completions, but rapid population growth means demand will continue to outpace supply,” Mr 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.”

Lower land prices has also been a boon for the industrial sector, where the report confirmed Melbourne is Australia’s largest logistics and industrial hub, with more than 30m square metres of space and 1.5m square metres taken up by manufacturing tenants since 2020 – more than Sydney and Brisbane combined.

This industrial strength is reinforced by major investments in AI and data centres, with Victoria’s lower land and power costs and more streamlined development pathways benefiting investors.

JLL Australia residential research manager Will 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.

With yields at historically attractive levels and transaction volumes rebounding, Melbourne is now offering one of the most compelling entry points for investors, JLL’s Head of Capital Markets in Victoria Josh Rutman, said.

“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,” he said.

Victoria is ahead of other states on delivering built-to-rent projects, with 3505 units completed in 2025 and a further 2154 expected this year.

But more traditional markets, like office, are at the point where strategic acquisitions can deliver real upside as conditions improve, Mr Silk said.

“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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