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International students “unfairly blamed” for Australian rental crisis

With international students accounting for only 4% of Australia's rental market, the Student Accommodation Council representing the country's PBSA sector says the students have been "unfairly blamed" for Australia's rental crisis.
April 26 2024
4 Min Read

With international students accounting for only 4% of Australia’s rental market, a group representing the country’s purpose-built student accommodation sector says the students have been “unfairly blamed” for Australia’s rental crisis.

Research published by the Student Accommodation Council details that a rise in smaller and solo-person households, intrastate migration and a trend to re-purpose second bedrooms into home offices have all impacted supply and affordability of rents in Australia.

The report states that international students have “unfairly worn” the blame for Australia’s rental crisis, adding that many complex factors have stymied supply and driven demand.

“To lay the blame for Australia’s overheated rental market at the feet of students, who underpin our university sector and fill skills gaps within our cities, is at the very least unfair, and at the most highly damaging to our reputation as a welcoming country,” executive director for Student Accommodation Council within the Property Council of Australia, Torie Brown, and council chair and CEO of Scape, Anouk Darling, wrote in the report.

They acknowledged that while world-class student accommodation is being developed, there needs to be a “greater pipeline of projects to ensure housing choice for all students when they arrive in Australia”.

A shift in location preferences, with more individuals seeking to live in regional areas during the pandemic, natural population growth and strong house price growth – leading to home ownership becoming inaccessible and resulting people renting for longer – have all driven demand in rents.

Challenges to supply have included rising construction costs and skills shortages, planning restrictions, inadequate urban infrastructure and more short-stay accommodations in both inner-city and regional areas.

Extensive approval processes extend the timeline for rental property developments, resulting in delays in completion, it added.

The report has sought to bust myths around international students causing increased rental demand, heightened rental costs and the crowding out of Australian citizens and permanent residents.

It notes that rents began rising in 2020 when there was no international student migration, with median weekly rent increasing by 30% between 2019 and 2023. In the same period, student visa arrivals decreased by 13%, it added.

Only 13 of Australia’s 556 Local Government Areas have a proportion of international student renters that exceeds 10% of the total renting population, the paper found.

With 73% of LGAs having a concentration of international students that is less than 1%, international students are concentrated in only a small number of rental markets, it said.

Other countries, including the Netherlands and Canada, have also had challenges with housing shortages being misreported in media, despite not all regions being impacted.

It also details that the current pipeline of new purpose-built student accommodation will not satisfy future demand.

A projected 7,770 new beds due to come online by 2026 will not be enough to “alleviate demand in the private rental market”, it said.

By further increasing PBSA supply, Australia “could benefit from a growing student population whilst mitigating pressure on rental demand”.

“There are more domestic students in rental homes than international – yet no one is suggesting we ban share-houses for local university students,” Brown added.

“We need to look at the broad spectrum of issues driving up rent and reducing the supply of homes, rather than blaming a single cohort.”

The pipeline of PBSA projects needs to add 66,000 new beds to the market by 2026 to “maintain the proportion of international students living in our buildings rather than the private market”, she added.

“If we continue to build new student accommodation assets at the current rate, we will see an extra one per cent of international students forced into the private rental market.”

“The difficulties faced by the sector include slow planning systems, high property taxes and clunky state-based legislation”

PBSA is being touted as one solution to research from The Institute of Public Affairs that suggested a supply shortfall of 252,800 units in the six years to 2028.

The conservative think tank suggested that people on student visas has been exacerbating the accommodation shortage – messaging that the new report is directly questioning.

During last year’s AIEC conference in Adelaide, stakeholders said both homestay and PBSA should be maximised to mitigate shortages, while accommodation was one of 29 recommendation in October’s trade subcommittee report.

Recommendation 10 urged government to “urgently work” to foster the expansion of the PBSA sector.

The committee also raised concerns that international students were being unfairly scapegoated or blamed for broader pressures in the housing market.

“The difficulties faced by the sector include slow planning systems, high property taxes and clunky state-based legislation,” Darling said of the challenges to complete new projects.

“International students contribute $25.5 billion to the Australian economy, and they deserve the best housing experience when they arrive in our country.

“We need governments to work with us to grow the supply of professionally managed, custom-built and safe student accommodation which alleviate pressure on the private rental market.”

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