International students aren’t responsible for Australia’s rental crisis; limiting enrolments could harm universities, local businesses, and the economy.
Overseas students aren’t responsible for rental crisis,
Research from the Student Accommodation Council (SAC) reveals that only 6% of renters nationwide are international students, mostly in capital cities.
The government plans to cap international student enrolments at 270,000, effective January 2025, to address rising rent concerns.
However, the study indicates that international students make up 7% of renters in Victoria, and 6% in New South Wales and Western Australia.
Of that 6% share, 39% live in purpose-built student accommodation, further reducing their impact on the general rental market.
Moreover, the growth of purpose-built student accommodation has kept international students largely out of the broader housing market.
Between 2015 and 2024, bed numbers in these facilities increased by 74%, with the expansion concentrated in capital cities.
These student-exclusive properties help alleviate pressure on the general rental market, preventing significant rental price fluctuations due to student numbers.
The government’s enrolment cap will likely reduce international students in the general rental market by only 0.2% in 2025.
By 2026, their share in the market is expected to decrease from 5.4% to 4.8%, showing a small shift.
This decrease will primarily affect areas near universities, with minimal impact on overall vacancy rates across the broader market.
Underlying causes of the rental crisis
Australia’s rental crisis is driven by several key factors:
- Insufficient New Builds: A lack of new construction to meet demand, with current projects taking 50% longer than four years ago due to approval delays, a shortage of skilled workers, and rising material costs.
- Investor Exodus: Many investors are leaving the rental market, partly due to low demand for inner-city rentals during the pandemic and increased land taxes in Melbourne.
- Population Growth: Both natural population increases and migration are driving higher demand for housing. Additionally, an aging population means more people need housing for longer periods.
- Rise in Single-Person Households: A growing number of single-person households is contributing to the reduced availability of rental properties.
- Cost-of-Living and Financial Pressures: The ongoing cost-of-living crisis, higher interest rates, and rising employment rates make it more difficult for individuals to afford buying or renting homes.
- Shift to Short-Term Rentals: Many property investors are opting for higher returns in the short-term rental market, reducing the overall availability of long-term rental properties.
Effects of reducing international student numbers
International education is Australia’s fourth-largest export, generating $48 billion and supporting 335,000 jobs.
Capping student numbers may cut GDP by $4.1 billion and result in 22,000 job losses.
Additionally, universities could experience a 6.4% decline in revenue.
Solutions
To increase rental availability, we must focus on building more homes and removing obstacles that hinder construction.
Additionally, offering incentives for investment properties would help boost rental stock and address the housing shortage.
There are also numerous challenges in building student accommodation, including tax barriers, zoning restrictions, and obstacles to large-scale investment.
These challenges could be alleviated to allow for the construction of more purpose-built student housing options.
Instead of reducing international student numbers, which would have minimal impact, the SAC analysis recommends increasing rental stock to tackle the crisis.
This approach would also preserve the economic benefits that international students bring to the country.
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