International students didn’t cause the rental housing crisis, say Go8 unis

Rising numbers of international students did not cause the housing crisis, say the Group of Eight universities in a new economic paper.

International students did not spark the housing rental crisis, says the Group of Eight universities.

The housing crisis was not sparked by high numbers of international students arriving in Australia, according to the Group of Eight universities, citing data which shows a tightening of the housing rental market before international students began returning to the country in 2022.

In a new economic paper the Go8 says that Australia’s housing affordability crisis, and more general cost-of-living issues, are “fundamentally a supply side problem, rather than attributable to international student arrivals”.

The Go8 universities have been boosted by a massive increase in international students in the past two years. and many of the eight are still recording student growth even as the federal government is clamping down on the issue of student visas and considering a cap on student arrivals.

The paper says that, from a peak in March 2021, the monthly number of new dwellings approved for construction has fallen by 46 per cent, illustrating the extent of the problem with housing supply.

“The number of international student arrivals has no direct bearing on supply side factors which include decades of underinvestment, government regulation, planning approvals, elevated construction costs and workforce shortages, supply chain disruptions. and weak productivity growth,” said Go8 chief executive Vicki Thomson.

She said that any move by the government to cap the arrival of international students in an effort to address housing availability and cost of living pressures would be an “own goal”.

The Go8 paper, titled International students and housing and other cost of living pressures, says the relationship between residential vacancies and international student arrivals was not straightforward.

It pointed out that, from 2012 to 2019, the vacancy rate was consistently going up even as student arrivals were increasing. Then when international student arrivals were blocked by border closures in 2020 and 2021, the vacancy rate declined as rental properties were withdrawn from the market.

The paper does concede that the relationship between housing demand and international student arrivals “may well be stronger in locations closer to education institutions” especially in the inner city areas of Sydney and Melbourne.

But “these are localities where demand for housing already exceeded supply before the recent spike in net overseas migration”.

Ms Thomson said that the federal government already had a means – through the compacts required to be negotiated between the federal Department of Education and each university – to control the flow and the profile of international students without resorting to caps on student visas.

“It currently exists within the nature of these discussions to work through key strategic issues like the number of international students enrolled, the postgraduate and undergraduate mix, the countries of origin, the courses being studied and insights into post graduation destination,” she said.

Ms Thomson pointed to the experience in Canada, where caps on students were introduced in January leading to a 20 per cent drop in international student applications at the country’s top research universities.

“In a highly competitive international education market, it’s likely these top students are electing to study at world class universities elsewhere,” she said.

IDP Education’s latest Emerging Futures survey of international students found that Canada is now the least popular destination among the top four countries (which also include Australia, the US and the UK) after being equal top a year ago.