International student surge triggers higher rental crisis fears

A new report has warned international student numbers are out of control at a time of extreme rental shortages – “baking in” the housing crisis and rent rises for domestic tenants.

A record number of student arrivals last financial year, and projections through to 2028 have triggered fears over the impact on the housing supply crisis.

A new report has warned international student numbers are out of control – taking up the equivalent of a quarter of new housing supply to 2028 – “baking in” rent rises for domestic renters.

The Institute of Public Affairs report said the federal government oversaw the largest ever net intake of international students last financial year of more than 250,000 people – twice the previous high of 122,000 in 2009.

“Last financial year, on average across Australia, new international students took up 70 per cent of the net new housing units supplied to the market, leaving just 30 per cent for the rest of the nation, including other new migrants,” it said.

“The vast majority of students live in rental accommodation, and their entry into the rental market has been a major contributing factor to rental shortages and rapidly rising rental costs.”

The Institute of Public Affairs table for international students’ equivalent share of housing units from 2023 to 2028. (Source: IPA)

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IPA was critical of the federal government’s decision to increase student numbers at time of dire housing shortages.

“It was claimed that the increase to net international student intake compensates for the reduction in international student arrivals due to COVID-19. Yet the intake for the last, and expected intake for this, financial year will result in more than 85,000 net arrivals above and beyond what would have been required to offset the COVID-19 decline.”

The Property Council of Australia’s Student Accommodation Council has defended the student numbers, expressing concern that IPA was blaming international student intake for exacerbating the rental crisis.

Adina Cirson, SAC’s acting executive director said 75,500 of those students lived across 200 purpose-built student accommodation developments not impacting on rental vacancy rates.

“Blame should not fall squarely at the feet of increased international student numbers, when planning, taxation, building costs, archaic approaches to rental reform and a lack of land supply are all impacting on the supply of housing across the nation,” Ms Cirson said.

IPA said more than 24,000 international students arrived in Brisbane last financial year.

She said “providing international students with appropriate purpose-built accommodation keeps them from competing in the private rental market”.

“We need to understand that the delivery of student accommodation needs to be a priority at every level of government – rather than trying simply cut back on the number of students – which are vital to our service export industry and broader economy”.

IPA executive director Daniel Wild warned the impact of the significant increases in international student numbers would be felt in capital cities where most of them resided.

He said more than 24,000 international students arrived in Brisbane last financial year – the equivalent of 57 per cent of new housing supply built during the 12 month period – with a further 18,000 more expected this financial year.

“Queenslanders already face rising rents, more costly mortgages, and ever deteriorating services and infrastructure that will only be made worse by the announced unplanned jump in its international student intake,” he said.

“Migration has and will continue to be critical to our economic and social success into the future. However, many Queenslanders are beginning to question the consequences of large, unplanned increases to migration settings that will only exacerbate their capital city’s housing shortage.”

IPA said international students’ educational experience would also suffer as a result of issues associated with a lack of housing availability across capital cities.

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Mr Wild warned that Australia was staring down the barrel of a housing supply shortfall of over 252,000 homes in the next five years.

“Given the size of this unplanned increase in the international student intake and Australia’s housing shortage, students will have no other option than to battle for properties alongside Queenslanders also looking for housing.”

Mr Wild said from 2023 to 2028, a net 75,000 international students were expected to arrive in Brisbane alone, absorbing the equivalent of one in three new houses expected to be built over the period.

IPA warned “the consequences of the unprecedented influx of international students are not just felt by Australians but also the international students themselves, whose educational experience suffers as a result of issues associated with a lack of housing availability, especially in Australia’s capital cities”.

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Originally published as International student surge triggers higher rental crisis fears