Australia's 'affordable' housing crisis affecting international students

Indian students make up the second largest cohort of international students in Australia at 17% with just under 100,000 students after China at 22%

Australia is experiencing a significant surge in international students, with 613,217 students currently enrolled, as of March 2023. This is a 27 per cent increase compared to the previous year. This growing international demand for education has resulted in a pressing need for cost-effective and high-quality student housing.

The report, "Beyond Beds: Decoding Australia's Student Housing Market" by University Living, reveals that Australia's student housing market is estimated to be worth AUD 10 billion, with a staggering compound annual growth rate (CAGR) of 17 per cent.

This growth has led to rising rental costs of 10 to 20 per cent in major cities, contributing to the ongoing housing crisis. Health & education is Australia’s second-largest industry, contributing 13 per cent to overall output in the country.

 

It should be noted that only 10 per cent of the market accounts for on-campus accommodation, while the remaining 90 per cent is off-campus accommodation.

The total university enrollment in Australia is estimated to be around 1,550,000 students, both domestic and international.

Increased international enrollment led to rise in housing demands

The rise in demand for beds is attributed to international students, accounting for almost 76 per cent of the student housing market size in 2023. Indian students make up 17 per cent of the international students in the country, only second after China which accounts for 22 per cent of the international student population. In 2023 India’s international student enrollment surged by 28 per cent, while China declined by four per cent.

 

According to the report's estimates, there are more than 60,000 beds across 42 universities in Australia, managed by university and corporate entities. Additionally, key purpose-built student accommodation (PBSA) players, along with small regional ones, manage around 90,000 beds. Approximately 26 per cent of PBSA beds are occupied by domestic students, with the rest being used by international students.

Apart from PBSA, students also have the option of private rentals and homestays, which form an unorganised market. Private apartments offer around 360,000 beds, while homestays provide approximately 100,000 beds.

City-wise break up of student housing

Sydney, Melbourne, and Brisbane dominate the market share in terms of beds, with a combined share of 79 per cent of the 400,000 beds available.

In Sydney, the occupancy rates have reached an all-time high of 98 per cent, with rental rates increasing by 10 per cent in the past year.

Similarly, in Brisbane, occupancy rates are at 96 per cent, and rental rates have risen by six per cent in the past year.

Melbourne also experiences record-high occupancy rates of 97 per cent, with rental rates increasing by eight per cent over the past year.

In Perth, occupancy rates are at 95 per cent, and rental rates have increased by five per cent in the past year.

Adelaide sees occupancy rates at 94 per cent, with rental rates increasing by four per cent over the past year.

The strong demand for student housing in these cities is fueled by its large population of young people and the influx of international students.

Government efforts to increase housing

There may be a silver lining as the government of Australia is making efforts to improve housing supply, aiming to build one million new homes from 2024. They are also increasing incentives for long-term rentals and investment in social and affordable housing.

Moreover, Australia's popularity as an international student destination has caught the interest of private investors, leading to growing investment in the student accommodation market. This is due to its high occupancy rates and steady returns.

As the demand for international education continues to rise, addressing the housing crisis becomes crucial. Furthermore, as more Indian students opt to study in the country, they need to be aware of the accommodation availability and cost of living to make informed decisions about their education.

On another positive note, the Australian government has made efforts to increase the hours that international students are allowed to work. The cap on working hours for international student visa holders has been increased to 48 hours a fortnight from July 1, with exceptions for students working in aged care until December 31, 2023.

International university graduates from Australian institutions will also get an extra two years of post-study work rights from July 1.