Welcome mat is an irony for international students

As Australia lays out the welcome mat to international students, we ask: Where are they all going to live?

Residz Team 4 min read

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Free tickets to the Melbourne Food and Wine Festival and the creation of a Student Welcome Centre are just some of the “welcome mats” being laid out for international students headed to Victoria.

And, welcome they are. Overseas students in higher education contributed about $25.4 billion to the Australian economy in 2019–20.

But, with so many students arriving in the midst of a rental crisis, where are they going to live?

Since the pandemic rental vacancies have plunged to record levels and some student housing was sold to private developers.

If a property is available, chances are it’s more expensive than before.

As the overseas students pour back in their tens of thousands, they’re competing with locals for a suitable and affordable place to live.

So, what are the pressures (and release valves) around student accommodation in 2023?

Student numbers jump by a third in Vic

The City of Melbourne really does have the welcome mat out for the 104,000 international students studying in “the education state” in 2023. That’s a 33% increase on January 2022.

It follows a recent survey by The Emerging Futures showing Australia was the world’s second most preferred destination to study.

11,000 prospective students, applicants, and current students were surveyed in August 2022.

Canada remains the top choice for 27% of surveyed students, while Australia is the preferred destination for 25% of students – up from 20% in March.

Students returning creates a buzz

Already, Melbourne is feeling the buzz of having the students return. The City says weekday pedestrian activity is up almost 60% compared to the same time last year.

Students from India make up the largest cohort at 22%, followed by students from China at 20%.

But, there’s a less positive buzz when it comes to accommodation.

According to Tenant Victoria’s director of community engagement Farah Farouque, quoted in The Guardian, some students have to resort to unregistered, overcrowded rooming houses for accommodation.

“[They are] often forced to share bedrooms with other students, which meets the definition of homelessness,” she says.

More students than before COVID-19

The situation is the same across the country, and it could get worse.

According to The Conversation, student visa applications in the second half of 2022 were up 40% on the same period in 2019.

Most concernedly, the increased numbers during Australia’ rental crisis are going to put pressure on an already stressed group of people.

A survey of 7,000 international students by The Conversation in 2019 showed that 44% of students were secure, 31% were moderately precarious, 20% were highly precarious, and 5% were extremely precarious.

Some 21% reported going without meals in the 12 months prior to the survey. And 22% were unable to heat or cool their home adequately.

Universities sold off student accommodation

Some of the problem can be sheeted home to a few universities selling student accommodation to private companies.

For example, The Conversation says University of Technology Sydney sold three buildings with 428 beds for A$95 million to Scape in 2021.

And The Guardian says the University of Sydney sold off more than $70m of property in 2021, including “end of life” terraces offering that provided some of the most affordable close-to-campus accommodation in the area.

In some cases, this has led to higher rents being charged.

According to The Guardian,  a large studio apartment at a Scape complex in inner-city Melbourne has a rental of $759 a week – 57% higher than the city’s median unit rent of $482 a week.

Record low vacancies

In January fewer than 1% of rental properties were available for any tenants to lease.

According to the Sydney Morning Herald, Australia’s two biggest cities Sydney and Melbourne had a 1% vacancy rate, a record low for Melbourne and an equal record for Sydney.

The SMH says Perth also hit a record low, at 0.3%, Adelaide was at the same level, and Brisbane was at 0.8%.

Rentals aren’t just hard to come by, they’re becoming prohibitively expensive.

CoreLogic’s Head of Research and author of CoreLogic’s Quarterly Rental Review for Q4 2022 Eliza Owens says rents are still rising in most capital cities and regional areas.

“Since the start of the upswing in September 2020, Australian rent values have lifted 22.2%,” she says, “marking the largest rental upswing on record (based on the CoreLogic hedonic rental index back series, which goes back almost 18 years).”

New student accommodation

Two student accommodation towers have recently been added to the Melbourne CBD to house 1300 beds and, in 2020, Brisbane’s Herston Quarter old nurses’ quarters on the site was converted to accommodation for around 500 students, says Urban Property Developer.

It also says a provider has recently opened one of Adelaide’s tallest student accommodation buildings, with 725 beds, and a property in Sydney’s East will house a 1100-bed development across the road from the University of NSW’s Kensington campus.

UPD quotes Australian Unity’s executive general manager for social infrastructure, Ryan Banting, who says there is investor interest in the sector.

“Increasingly, investors both here and overseas are looking to sectors like PBSA [purpose-built student accommodation] that have strong user demand and positive macroeconomic tailwinds,” Banting says.

In summary, Australia says welcome to our international visitors, but good luck finding available, affordable accommodation.

Residz can help buyers and sellers reduce the stress:

Photo by Toa Heftiba on Unsplash