This was obscure – and the other answers were very helpful in getting me pointed in the right direction.
After trying the suggested solutions, I poked around deeper and found this in Project Properties –> Java Build Path –> Source(tab) –> Source folders on build path: [Exclusion section]
**/application.properties
Removing the exclusion fixed the issue and the values were picked up from the application.properties file during startup.
It may be worth noting that running this from the command line (in the directory with the .project file) bypassed the exclusion problem and worked fine.
mvn spring-boot:run