International students ‘drive average rents down’ in Australia

International students impose downward pressure on Australian rents and have no statistically significant impact on housing availability, new research suggests.

A University of South Australia study has found that rental costs tend to fall when international student numbers rise, once inflation and vacancy rates are accounted for.

The analysis, published in the journal Higher Education, is based on seven years of monthly data on rents, rental inflation, vacancy rates and overseas student numbers at the national, state and territory level.

It found that increases of 10,000 international students had corresponded with a A$2 (£1) decrease in weekly rents. Even after the outbreak of Covid-19, which sparked a crisis in housing availability, rents continued to decline as foreign enrolments mounted.

The researchers speculate that overseas students’ lack of “recognised rental history and credit” renders them uncompetitive in the private rental market and forces many to share bedrooms in cramped apartments. This alleviates pressure on rental availability while driving down average costs nationally, the paper suggests.

Within individual cities, the study found that foreign student influxes exerted “marginal, if any” influence on rental costs and vacancy rates.

Corresponding author Michael Mu said a “very marginal” association between rents and overseas enrolments in two smaller capitals, Adelaide and Hobart, had disappeared entirely since the pandemic. This suggested that Covid impacts like the rise of home offices had steamrollered any influence from students.

“International students do have impact on local living, including housing, but only in certain areas [with] very high concentration of international students,” he said. These localised impacts had been subjected to “over-generalisation”, he continued: “This thing has become politicised.”

The findings undermine one of the government’s key policy rationales for its overseas student crackdown. In his May 2024 budget speech, treasurer Jim Chalmers blamed rising international enrolments for putting “pressure on prices and rents, especially in our cities and suburbs”.

Opposition leader Peter Dutton responded with a vow to reduce the “excessive” foreign enrolments at metropolitan universities. He repeated the pledge at a Melbourne election campaign rally on 12 January, promising “stricter caps on foreign students to relieve stress on city rental markets”.

In a factsheet published in September, the Department of Education claimed a “connection” between rental prices and high numbers of international students. It said housing lobby assertions that international students constituted only 4 per cent of renters were based on census data from 2021, when foreign enrolments were at a historic low.

The factsheet has since been removed from the department’s website. The department said it was “updating” its factsheets following the government’s unsuccessful attempt to legislate international enrolment caps.

Co-author Hannah Soong said the study had been inspired by earlier research into international student well-being in Adelaide. It found that international students were an “easy target” for politicians “because they can’t vote”.

“We’ve got to look at international students fairly,” she said. “If you blame…them, you need evidence.”

The paper says that while international education has influenced the “cityscape” in student precincts like central Melbourne and Auckland, its widespread impact on rents has been limited to US college towns where students constitute a “considerable proportion” of the population.

The paper says international students, long exploited as “cash cows”, are now being “leveraged” for political debates. “These students doubly suffer from political scapegoating and economic exploitation.”

john.ross@timeshighereducation.com