Australia’s international education sector is thriving, but the student housing market is buckling under the pressure. With international enrolments soaring past pre-pandemic levels, the mismatch between demand and supply is reshaping rental markets, leaving students—both local and international—scrambling for affordable accommodation.
In April 2024, Australia counted 688,000 international students, a 12% rise from pre-COVID numbers. Yet for every 15 students, there’s just one purpose-built student accommodation (PBSA) bed. The shortfall isn’t just a problem for students; it’s spilling over into the broader rental market, where prices have surged. But despite the popular perception that international students are the culprits behind rising rents, data shows they make up just 4% of the country’s rental market. The real problem? A sluggish pipeline of dedicated student housing, an underprepared university sector, and structural shifts in the way Australians use their homes.
Housing Market Realities
Between 2021 and 2024, only 9,759 new student accommodation rooms were approved nationwide. That’s a drop in the ocean compared to the sheer scale of demand. Even with projections of 19,000 new PBSA beds coming online by 2027, the sector remains lightyears behind where it needs to be. The Student Accommodation Council estimates that Australia requires an additional 84,000 PBSA beds by 2026 just to stabilise the impact on the rental market.
But there’s another wrinkle. While China and India continue to send the highest numbers of students, enrolments from Nepal, the Philippines, Colombia, and Vietnam have risen sharply. This evolving student mix brings diverse housing preferences and budget constraints, making it difficult to implement one-size-fits-all solutions.
Adding to the pressure is the way housing has changed post-COVID. Spare rooms that once accommodated students have been turned into home offices, tightening the supply of shared rentals. Since 2019, median weekly rent has jumped by 30%, yet international student arrivals were 13% lower over the same period. The numbers make it clear: the rental crisis was already brewing before students returned.
The Role of Universities
Australian universities have largely stayed on the sidelines when it comes to student housing, but that’s starting to change. The University of Melbourne, for instance, has developed a range of student accommodation options, complete with included utilities, fitness facilities, and round-the-clock support. While this model offers stability, it’s the exception rather than the rule. Most universities lack the land, capital, or expertise to take housing into their own hands.
One solution is for universities to team up with private developers, securing PBSA beds without bearing the full financial burden. The Student Accommodation Council has pushed for universities to either build their own housing or partner with specialists, recognising that leaving student accommodation to the private rental market is no longer viable.
The Economics of PBSA
Investment in student housing is booming, with PBSA approvals jumping 207% in just two years. But the question remains: who can afford it? International students already fork out upwards of $30,000 a year in tuition. Add premium rental costs, and Australia starts looking less attractive compared to other study destinations.
The problem is magnified by where PBSA beds are being built. Sydney and Melbourne dominate the approvals landscape, leaving students in regional areas with few dedicated options. In New South Wales, nearly half of all PBSA approvals have been concentrated in just three Local Government Areas—Randwick, the City of Sydney, and Ryde. Victoria follows a similar pattern, with the bulk of approvals in the City of Melbourne. Meanwhile, regional universities in places like Newcastle and Port Macquarie are struggling to attract investment, despite growing student populations.
Finding Solutions
Fixing the student housing crunch requires a mix of policy reforms, university initiatives, and smarter investment strategies.
More PBSA Beds: Expanding the PBSA pipeline is essential. The current trajectory of 19,000 new beds by 2027 falls well short of the estimated need for 84,000 by 2026. Tax incentives, streamlined approvals, and grants could help fast-track developments.
University Action: Institutions need to step up their involvement. They could be required to provide housing strategies for international students, with clear targets tied to accreditation criteria.
Public-Private Partnerships: Universities, developers, and governments should work together to accelerate student housing projects, ensuring affordability while maintaining investor appeal.
Regional Expansion: Incentives for PBSA developments outside capital cities could relieve pressure on metropolitan markets while supporting regional universities.
Smarter Planning: PBSA developments are often classified as non-residential, which distorts housing data and complicates planning. Aligning classifications with broader housing policies could create a clearer picture of supply and demand.
A Crunch That Won’t Fix Itself
Australia’s international education sector is a $25.5 billion industry, but without adequate housing, its growth could hit a ceiling. The current pace of PBSA development is simply too slow, and unless bold action is taken, the student housing crisis will continue to spill into the broader rental market.
Blaming international students for Australia’s rental woes is a distraction from the real issue. The challenge is structural, tied to planning, investment, and shifting housing patterns. Unless these deeper issues are addressed, students—both local and international—will keep paying the price, quite literally, for Australia’s failure to plan ahead.
Data sourced from: Australian Bureau of Statistics (ABS) – Student Accommodation in Australia: Estimates of student accommodation approvals, 2021/22-2023/24. Released 13/03/2025
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