International students cause rent rise and it’s only getting worse

A record intake of temporary international students fuelling demand for housing drove up rents by an average of $20 a week, as Australians across the country feel the pinch.

There appears to be no solution in sight for the rental squeeze. Picture: NCA NewsWire / Martin Ollman

A record intake of temporary international students fuelling demand for housing drove up rents by an average of $20 a week, according to new research.

As Australia grapples with where to house a forecast 1.5 million migrants – including skilled workers arriving to fill dire labour shortages – soaring international student numbers have prompted calls for more purpose-built accommodation to ease pressure on the rental market.

Australia granted 428,496 student visas in the year to March 31, a record high that Coalition Immigration spokesman Dan Tehan said had a significant impact on the private rental market.

“Issuing record numbers of international student visas in the middle of a housing shortage creates problems for Australians and for international students who are forced to compete for limited supply, which drives up rents,” he said.

New analysis of data from 2005 to 2023 by the Institute of Public Affairs has found that every additional 100,000 international students in Australia is associated with a 1.5 per cent increase in rent.

International students Leesa Zulkefli, 25, Alina Lin, 27, and Natsaran Ang, 26. Picture: Jane Dempster

Based on this association, the IPA has calculated in 2022-23 the addition of more than 250,000 net international students accounted for about 80 per cent – or $20 – of the average rent increase of 4.4 per cent for that year.

IPA deputy executive director Daniel Wild said universities must do “significantly more” to house the students they attract to Australia.

“While universities do provide some accommodation for students, the majority of students are in the private rental market, which is driving up costs for Australians,” he said.

Property Council of Australia chief executive Mike Zorbas said meeting the accommodation needs of specific cohorts like students would ease demand in the broader housing market.

“Customer-led accommodation that takes pressure off the general market, and makes services easier to deliver, especially purpose-built student accommodation and retirement living communities, must ... be a national priority,” he said.

The federal Budget in May forecast Australia’s net overseas migration would reach about 315,000 in 2023-24.

Mr Zorbas said skilled migrant intake was critical to ensuring Australia met its housing targets, as nearly half of all building trades were in shortage last year.

International students are driving rent up for Australians.

“As the population grows, we need an extra boost in the inflow of construction trades to turbocharge housing supply and meet our 1.2 million new homes target by 2029,” he said.

“We must make it easier for construction trades to have their qualifications recognised here.

“We must also create better and faster state planning systems to affordably unlock more land.”

Immigration Minister Andrew Giles said the government’s plan to “build a migration system that works in the national interest” by bringing in the most-needed skills was backed by workers and business.

“(Visa) turnaround times for workers in critical shortage like teachers and nurses are turned around in days- not months like under the former lot,” he said.

As July figures showed national rental vacancy rates holding steady at just 1.3 per cent, SQM Research managing director Louis Christopher said there appeared to be no “significant solution on the horizon” to Australia’s “acute shortage” of rentals.

“Where possible I would recommend tenants consider regional areas once again if their employment enables them to work off-site,” he said.

“I also encourage discussion about temporary migration caps, rather than rental caps, which will only make the rental crisis worse over the medium term.”

The Albanese Government has recently moved to roll back pandemic-era visa and concessions for migrants.

The Albanese Government has recently moved to roll back pandemic-era visa and concessions for migrants, including ending a temporary change that allowed international students to work unlimited hours.

A temporary pandemic event visa will also be wound up as part of the changes designed to put “downward pressure” on net overseas migration.

The government also announced a suite of measures to “support integrity” in the international education system, including closing a “loophole” that allowed students to switch from genuine study to focusing on gaining work in Australia once they arrived.

Home Affairs Minister Clare O’Neil said it was essential Australia maintained its global reputation for quality education, including zero tolerance for people who exploited students.

“Our message is clear – the party is over, the rorts and loopholes that have plagued this system will be shut down,” she said.