International Students and the Australian Rental Crisis: A Growing Burden on Renters, By Professor X

Over the past year, the influx of international students into Australia has ignited a heated debate about their impact on the nation's already strained rental market. As rental prices soar and vacancy rates plummet, many Australians are pointing fingers at the sheer volume of international students as a key driver of the crisis. While some reports downplay their role, rigorous evidence from sources like the Reserve Bank of Australia (RBA) and updated government data paints a clearer picture: the surge in international students is measurably harming renters by intensifying demand and driving up costs, particularly in urban centres. This blog piece explores the data, debunks outdated counterarguments, and highlights the broader consequences for Australian renters.

The Numbers Tell the Story

The RBA's July 2025 bulletin, International Students and the Australian Economy, provides compelling evidence of the students' impact on the rental market. Unlike domestic residents, international students have a higher propensity to rent privately, about 50% rely on the private rental market compared to just one-third of the general population. They also tend to cluster in inner-city areas like Sydney and Melbourne, where rental competition is already fierce. This concentration amplifies their effect on local markets.

Consider the scale: international student numbers skyrocketed from under 300,000 in 2022 to 560,000 by the end of 2023, with visa holders reaching 696,162 by July 2024, a 91.3% increase from 2021 levels. This surge translates to roughly 7% of Australia's rental market, or one in every 14 rental homes. In economic terms, the RBA estimates that an additional 100,000 students could increase rental demand by 50,000 individuals (factoring in shared housing), pushing national rents up by about 0.5%. In tight markets like Sydney, this effect could double. The cumulative impact of the 2022–2023 student boom? A 1.3% rent increase attributable solely to their demand. With median weekly rents hitting $601 by late 2023, a 30% jump since 2019, this contribution is substantial.

Beyond Rent Hikes: The Squeeze on Availability

The harm extends beyond price hikes. The post-COVID influx of over 500,000 temporary visa holders, including students, has driven vacancy rates to historic lows. In inner-city areas, this has triggered bidding wars and heightened stress for renters, with 60% of Australian renters now facing affordability challenges. Students often live in group households, 28% compared to 13% for young locals, competing directly with families and young professionals for diverse housing types, from detached houses (116,000 students) to apartments (173,000 students).

This demand surge exacerbates Australia's housing shortfall, estimated at 175,000 dwellings. The result? Local renters are being squeezed out, particularly in cities like Sydney, where median house prices have hit $1.4 million and homeownership for those under 35 has plummeted from 60% in 1981 to 45% in 2021. The RBA notes that a 1% reduction in rental demand could lower rents by 2.5%, meaning the student-driven demand spike is locking in higher costs for everyone.

The Hidden Subsidy and Exploitation

The broader economic picture reveals an uncomfortable truth: Australian renters are indirectly subsidising the alleged $50 billion international education industry. As students occupy around 120,000 rental homes, they displace local renters in a market already stretched thin. Meanwhile, students themselves often face exploitation, cramming into substandard or overcrowded rentals to afford sky-high costs. This dual harm, higher rents for locals and poor living conditions for students, underscores a system under strain, where the benefits of education exports come at a steep cost to everyday Australians.

Debunking the Counterarguments

Some reports, like a University of South Australia study (2017–2024), argue that international students have a negligible or even negative impact on rents, citing a slight correlation between student numbers and lower weekly rents (e.g., +10,000 students linked to -$2 weekly rent). These claims, however, often rely on outdated pre-surge data or national averages that mask the concentrated impact in urban hotspots. The RBA's more granular models, focusing on post-2022 data, show clear upward pressure in high-demand areas, debunking the "negligible impact" narrative. Industry-backed reports, such as those from the Property Council, may also downplay effects to protect the lucrative education sector, ignoring the lived reality of renters facing bidding wars and shrinking options.

A Call for Sanity

International students are not the sole cause of Australia's rental crisis, supply shortages, investor behavior, and domestic demand all play significant roles. But their rapid influx, particularly post-COVID, has undeniably worsened conditions for renters. The government's recent visa caps signal recognition of this issue, but without aggressive investment in housing supply, the pressure will persist. Policymakers must balance the economic benefits of international education with the needs of local renters, ensuring that Australia's housing market doesn't buckle under the weight of its own success.

In conclusion, the evidence is clear: the sheer number of international students is contributing to a rental crisis that harms Australian renters through higher costs, tighter vacancies, and reduced affordability. It's time for a frank conversation about sustainable migration and housing policies to protect local Aussie young from their planned replacement.

https://www.macrobusiness.com.au/2025/08/proof-international-students-harm-australian-renters/