Fierce competition from students could force rents up 5 per cent in just 4 weeks

A surprise announcement from the Chinese government could see an influx of students desperate for rentals and add more stress to the current crisis.

More than 50,000 Chinese university students could flood the rental market after a surprise government announcement. Picture: Supplied

An influx of Chinese students – with estimates more than 50,000 could hit Australian shores next month – is going to place extra stress on a rental market already in crisis with predictions rents could soar by a further 5 per cent and exacerbate shortages.

The huge demand for accommodation comes as the Chinese government issued a surprise announcement on the weekend that it would no longer recognise the qualifications of students studying remotely.

This has left tens of thousands scrambling to return to Australia for the first semester, which begins in late February.

A report released by the Student Accommodation Council – an arm of the Property Council of Australia – showed many Australian cities were already at capacity for purpose-built student accommodation beds.

States including Brisbane, Perth and Adelaide were expecting zero vacancy rates in 2023, the report found, well before the Chinese Government’s announcement.

This means the already under stress private market – which has left many Aussies struggling to find a rental – will come under further pressure from the increased demand.

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Uni students with the flag of the Communist Party of China to mark the party's 100th anniversary during an opening ceremony of the new semester in Wuhan. Picture: AFP/China OUT

Student Accommodation Council executive director Torie Brown said the 2022 data showed Chinese students made up 27 per cent of all residents and alongside domestic students were the biggest two cohorts living in purpose-built student accommodation.

“With students scrambling to return earlier than expected, we will see student accommodation full in many markets – which will put pressure on already tight rental markets as students look elsewhere for places to live,” she said.

“Data released by Savills showed the supply pipeline for purpose-built student accommodation beds is muted for the next two years – with 100 per cent of the new beds coming online in 2024 located in Sydney and Melbourne.

“Governments at all levels need to prioritise the development of new student accommodation because it provides appropriate housing exclusively for students and stops them competing with mums and dads in the rental market.”

Student Accommodation Council president Anouk Darling (left) with the council’s executive director Torie Brown. Picture: John Feder/The Australian.

But Suburbtrends founder Kent Lardner said every rental market would be impacted by the return of thousands of students and vacancies would quickly drop to below 1 per cent in most suburbs as competition became fierce.

He also expected rents to soar by 5 per cent in the space of just four weeks.

Houses and units are now renting for an average of $732 a week compared to $574 in 2019 in Sydney, according SQM Research.

Student accommodation isn’t cheap either with rents topping $729 a week for a studio at Scape’s Redfern property, while a bed in a twin-share apartment is $419 a week and a single room in a five-bedroom apartment is $569 a week.

Studio apartments on Broadway from provider Iglu are priced at $799 per week, while a one-bedroom apartment will set two students back $903.50 per week at Sydney University Village.

Houses and units are now renting for an average of $732 a week compared to $574 in 2019 in Sydney. Picture: Supplied

Overall, rents for units in inner Melbourne have soared by 33.6 per cent, while in Sydney they soared by 23 per cent in the past two months while vacancies slumped below 2 per cent in each state, CoreLogic found.

“Against this backdrop of already extremely tight rental supply, a further boost to demand from a surge in foreign students is set to push rents even higher,” Eliza Owen, CoreLogic’s head of research told the Australian Financial Review.

“As these precincts become increasingly unaffordable we could see rental demand rippling outwards, especially towards those areas with efficient public transport options.”