Melbourne Infrastructure Projects, VIC

Melbourne’s economy is service-led, with dense housing activity and a broad urban project program

Economic base

Melbourne has a dense, service-led economy rather than a resource or agricultural base. In the 2021 Census, professional, scientific and technical services accounted for 17.6% of employed residents, followed by health care and social assistance at 10.4%, accommodation and food services at 12.9%, education and training at 8.5%, retail trade at 7.9% and financial and insurance services at 7%. Construction accounted for 3.6%, manufacturing 3.2% and transport, postal and warehousing 3.1%. This mix combines specialised business services with substantial daily-serving, visitor-facing and institutional activity.

The business base reinforces that character. In June 2025, Melbourne had 46,729 registered businesses and 15,990 employing businesses. Professional, scientific and technical services recorded 10,002 registered businesses, financial and insurance services 7,356, rental, hiring and real estate services 6,922, and accommodation and food services 2,962. Health care and social assistance recorded 2,696 registered businesses, while retail trade recorded 2,305. These counts describe registered enterprises, while the labour market recorded 141,862 people in the labour force and 5,835 unemployed in 2026-Q1, an unemployment rate of 4.1%.

Project program

The project program is active across retail, health, industrial and school work. Proposed transport work adds a forward direction, while completed work spans retail, school, health, transport and industrial categories. The largest categories of active or proposed work are retail, industrial and school, with large-scale activity in that group. Transport work is shared with other councils, so it should be read as a cross-council connection rather than solely as Melbourne’s own activity.

The construction setting is supported by strong non-residential building approvals. In the 12 months to June 2026, the value of non-residential building work approved to proceed was $3.4bn, equal to 1.08× the council’s own three-year average. This approval flow sits alongside the program’s concentration in retail, industrial and school work. Together, the pattern is consistent with continuing urban construction across commercial, employment, education and service settings, while the proposed transport direction may support movement between those settings.

Economic connections

The clearest connection is between a service-heavy economy and project work that adds or renews places where people shop, learn, receive care and conduct business. Retail work aligns with the large retail and accommodation base; health work aligns with health care and social assistance; and school work aligns with education and training. These links support the capacity of established service industries to operate in a dense urban setting, while industrial work may support business premises and employment activity associated with manufacturing, wholesale and related services.

Population change increases the importance of capacity across housing and everyday services. The estimated resident population was 194,481 in 2025 and rose by 6,916, or 3.7%. Natural increase contributed 552 people and net overseas migration 8,647, while net internal migration was -2,283. Melbourne’s current service base includes 14 open public and private hospitals, 65 approved centre-based childcare services with 5,855 places, and 6 residential aged care homes with 724 places. This combination supports a continuing need to coordinate built capacity with a changing resident base.

Outlook

The near-term outlook is shaped by population growth, a broad service economy and substantial urban building activity. The housing target is 4,268 homes a year, and approvals since July 2023 were at 76% of the yearly pace required over the period July 2023 to July 2026. That pace sits alongside a dense project program and a labour market with an unemployment rate of 4.1% in 2026-Q1. The main issue is coordination: housing, transport, health, education and employment settings need to develop in step with population change.

The indicators to watch are the direction of the project mix, the value of non-residential approvals, housing approvals relative to the target pace, population components and labour-market conditions. Proposed transport work is the main forward-facing connection shared with other councils, while active retail, health, industrial and school work remains aligned with Melbourne’s service and employment structure. Changes in these measures will clarify whether construction activity and service capacity are keeping pace with the resident base and the needs of a highly mobile urban population.

For council and planning staff

The housing target requires 4,268 homes a year, and approvals were at 76% of the required yearly pace between July 2023 and July 2026. Population was 194,481 in 2025, with change of 6,916, or 3.7%. Natural increase contributed 552 people and net overseas migration 8,647, partly offset by net internal migration of -2,283. Service capacity includes 14 hospitals, 65 approved centre-based childcare services and 5,855 childcare places, plus 6 residential aged care homes and 724 places. These measures frame the scale and sources of demand across core services.

For buyers’ agents and investors

The 2021 profile is predominantly renter-based: 67.2% of occupied private dwellings were rented, compared with 16.1% owned with a mortgage and 13.6% owned outright. Average household size was 1.8 persons and median age was 30. A high 72.7% of residents lived at a different address five years earlier. Median weekly household income was $1,678 and median weekly personal income was $959. The labour force participation rate was 70.1%, while the 2026-Q1 unemployment rate was 4.1%. Employment is concentrated in professional services, health, accommodation and food, education, retail and finance.

For builders and developers

In the 12 months to July 2026, 4,254 dwellings were approved: 7 new houses and 4,247 townhouses, apartments and other dwellings. That was 21.9 dwellings per 1,000 residents and 1.27× the council’s own three-year average. The value of residential building work approved was $2.6bn. Registered construction businesses numbered 3,934 in June 2025, including 681 employing businesses; construction accounted for 3.6% of employed residents in the 2021 Census. Non-residential building approvals were $3.4bn in the 12 months to June 2026, or 1.08× the council’s own three-year average.

Key takeaways

• Melbourne’s economic base is service-led, with professional, health, visitor, education, retail and financial activity supported by a large registered-business base.
• Project work is active across retail, health, industrial and school categories, with proposed transport work and large activity concentrated in retail, industrial and school categories.
• Population growth is being driven mainly by net overseas migration, while housing approvals are concentrated in apartments, townhouses and other dwellings and remain at 76% of the target pace.

Sources

• Professional, scientific and technical services — ABS Census 2021
• Registered businesses — ABS Counts of Australian Businesses
• Unemployment rate — Small Area Labour Markets
• Health care and social assistance — ABS Census 2021
• Accommodation and food services — ABS Census 2021
• Education and training — ABS Census 2021
• Retail trade — ABS Census 2021
• Financial and insurance services — ABS Census 2021
• Construction — ABS Census 2021
• Manufacturing — ABS Census 2021
• Transport, postal and warehousing — ABS Census 2021
• Employing businesses — ABS Counts of Australian Businesses
• Registered businesses, Professional, Scientific and Technical Services — ABS Counts of Australian Businesses
• Registered businesses, Financial and Insurance Services — ABS Counts of Australian Businesses
• Registered businesses, Rental, Hiring and Real Estate Services — ABS Counts of Australian Businesses
• Registered businesses, Accommodation and Food Services — ABS Counts of Australian Businesses
• Registered businesses, Health Care and Social Assistance — ABS Counts of Australian Businesses
• Registered businesses, Retail Trade — ABS Counts of Australian Businesses
• Labour force — Small Area Labour Markets
• Unemployed persons — Small Area Labour Markets
• Non-residential building approvals, latest 12 months — ABS Building Approvals
• Non-residential building approvals versus this council's own three-year average, weighted by the value of those approvals — ABS Building Approvals
• Estimated resident population — ABS Regional Population
• Open public and private hospitals — AIHW MyHospitals
• Approved childcare places — ACECQA national register
• Residential aged care places — AIHW GEN aged care
• Wholesale trade — ABS Census 2021
• Population change — ABS Regional Population
• Population change — ABS Regional Population
• Natural increase — ABS Regional Population
• Net internal migration — ABS Regional Population
• Net overseas migration — ABS Regional Population
• Approved centre-based childcare services — ACECQA national register
• Residential aged care homes — AIHW GEN aged care
• Dwellings approved since July 2023 against the yearly pace the housing target needs (100% is on pace) — Plan for Victoria
• Target: 119,500 net new dwellings from 2023 to 2051 (4,268 a year) — Plan for Victoria
• Rented — ABS Census 2021
• Average household size — ABS Census 2021
• Median age — ABS Census 2021
• Owned with a mortgage — ABS Census 2021
• Owned outright — ABS Census 2021
• Lived at a different address 5 years ago — ABS Census 2021
• Median household income (weekly) — ABS Census 2021
• Median personal income (weekly) — ABS Census 2021
• Labour force participation rate — ABS Census 2021
• Dwellings approved, latest 12 months — ABS Building Approvals
• Value of residential building work approved (new homes, alterations and additions), latest 12 months — ABS Building Approvals
• Registered businesses, Construction — ABS Counts of Australian Businesses
• New houses approved, latest 12 months — ABS Building Approvals
• Townhouses, apartments and other dwellings approved, latest 12 months — ABS Building Approvals
• Dwellings approved per 1,000 residents, latest 12 months — ABS Building Approvals
• Dwellings approved versus this council's own three-year average — ABS Building Approvals
• Employing businesses, Construction — ABS Counts of Australian Businesses