International students occupy about one in every twenty rental homes in Australia and place heavy pressure on some inner-city markets, but they are not the main driver of the nation’s rental crisis, according to new research released this week.
The third report in The Balance Sheet research series estimates international students occupy between 121,000 and 223,000 rental dwellings nationally, while arguing Australia’s housing shortage is primarily a supply problem rather than one driven by overseas students alone.
The study set out to answer a single question: if every international student left Australia tomorrow, how much of the rental market would actually become vacant?
Using Home Affairs visa data, the government’s own student surveys and industry accommodation censuses, the researchers estimate international students occupy between 121,000 and 223,000 rental dwellings nationally, with a central estimate of 145,000 to 180,000. That represents about 4.4 to 5.4 per cent of Australia’s roughly 3.3 million rental homes.
There were 732,210 people holding student visas in Australia at the end of March, a near-record level despite two years of enrolment caps. The report notes that visa caps restrict new arrivals rather than students already living in Australia, helping explain why the onshore student population has remained relatively stable even as new commencements fell 15 per cent.
The report argues that much of the public debate overlooks where students actually live.
“The single most important fact in this debate is that only about half of international students live in the general rental market,” it says.
Government survey data shows 49.4 per cent of international students rent privately, while about one quarter live with parents, relatives or friends. Around one fifth live in university halls or purpose-built student accommodation, while 3 per cent are in homestays
Government survey data shows 49.4 per cent of international students rent privately, while about one quarter live with parents, relatives or friends. Around one fifth live in university halls or purpose-built student accommodation, while 3 per cent are in homestays.
On the report’s calculations, the sudden departure of every international student would lift the national vacancy rate from 1.6 per cent to roughly 6 to 7 per cent.
“This represents the maximum possible relief, not a forecast,” the report says, noting such a scenario would simultaneously remove tens of billions of dollars in export income and the jobs supported by the international education sector.
The impact would also be highly uneven across Australia.
Students account for about 6 per cent of renters nationally, but more than one fifth of renters in the City of Melbourne and around one quarter in inner Adelaide. Across 73 per cent of local government areas, however, students represent less than 1 per cent of the renting population.
“The evidence points in two directions because it is measuring different things,” the report says in assessing the competing claims surrounding international students and rents.
The strongest evidence that students contribute to rental inflation comes from Reserve Bank modelling of population growth and rents, which suggests the post-pandemic return of about 400,000 student visa holders added somewhere between 2 and 4 per cent to national rents. International studies of university precincts point to similar effects, with impacts concentrated around campuses.
The report also examines evidence pointing in the opposite direction.
During the border closures of 2020 and 2021, when the international student population roughly halved, national rents still rose at the fastest pace in a decade, while regional rents increased a record 11.3 per cent in markets with very few students. The largest rental declines occurred precisely where international students had previously been concentrated. Melbourne CBD rents fell 17.8 per cent before recovering as students returned.
The report argues the second natural experiment is unfolding now. Two years after enrolment caps were introduced, rents are still rising 5.9 per cent annually and every capital city continues to record a vacancy rate below 2 per cent, according to Cotality’s June Quarter Rental Review.
Taken together, the evidence leads the researchers to describe international students as “a genuine, concentrated, local rental pressure and a marginal national one”, concluding Australia’s rental crisis remains overwhelmingly a housing production problem.
The report notes that dwellings completed per hour worked in construction have fallen 53 per cent since the mid-1990s.
Australia has about 134,000 student-only beds across university accommodation and purpose-built student housing, equivalent to roughly one bed for every four international university students
Student accommodation emerges as the policy area with the greatest capacity to ease rental pressure.
Australia has about 134,000 student-only beds across university accommodation and purpose-built student housing, equivalent to roughly one bed for every four international university students. Britain, by comparison, provides accommodation for more than half its university student population. Occupancy rates in Australia remain close to 100 per cent.
The report notes that around 40,000 additional beds are currently planned or under construction following government policies linking visa allocations to accommodation development. It argues this approach recognises that “beds, not bans, as the binding constraint”.
The research also revisits two commonly cited statistics.
It says the frequently quoted claim that international students represent only 4 per cent of renters is based on the August 2021 Census, conducted while Australia’s borders were largely closed and the student population was well below normal levels. Based on current enrolments, the report estimates the figure today is closer to 6 or 7 per cent.
At the same time, it argues that claims students make up 42 per cent of Sydney CBD residents refer to total population rather than renters and therefore overstate their influence on the rental market.
The report also examines the value of Australia’s international education sector.
While education exports were valued at $53.6 billion, it notes the Australian Bureau of Statistics acknowledged in December that around one third of recorded onshore spending is funded by wages earned by students while in Australia rather than money brought into the country from overseas. It concludes international education remains one of Australia’s largest export industries, although the headline figure overstates the net inflow of foreign income.
Student numbers, accommodation capacity and vacancy rates are rated high confidence, rental footprint estimates medium confidence, and counterfactual modelling, including the projected vacancy rate if all students left Australia, low confidence.
The report concludes with five key findings: international students occupy roughly one rental dwelling in twenty nationally; their impact is concentrated around universities, where they can account for up to one quarter of renters; removing every student would lift vacancy rates to around 6 to 7 per cent but at the cost of a $53.6 billion export industry; Australia’s rental crisis is primarily a housing supply problem; and expanding purpose-built student accommodation is likely to reduce rental pressure more effectively than enrolment caps.
Researchers say several questions remain unresolved, including the average household size of student renters, which may become clearer after the 2026 Census, and the housing footprint of the 237,000 temporary graduate visa holders who rent in the private market but are no longer counted in international student statistics.
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