International students are expected to “take up” almost 55% of net new accommodation on average across Australia in this financial year, after utilising some 70% of new units last year, a conservative think tank in the country has calculated.

The Institute of Public Affairs research suggested that the country will face a supply shortfall of 252,800 units in the six years to 2028 and said that an influx of people on student visas is exacerbating an accommodation shortage across the country.

While acknowledging that international students are “an important market” for Australia’s tertiary education sector, the think tank said that the “first job” of the country’s leaders “must be to ensure that there is adequate housing stock for those looking to get their first home or are in need of a rental”.

“Australians are entitled to ask how they can find a home as inflation drives up mortgages and rent prices become unsustainable, yet the federal government has presided over the largest intake of international students who filled the equivalent of seven out of 10 new homes,” said Daniel Wild, IPA’s deputy executive director.

It also claims that many international students move to Australia “for the primary purpose of working and seeking permanent residency rather than getting an education”. Part-time work opportunities and permanent settlement pathways are “major selling points” for educational and immigration agents, as well as for institutions, it added.

“Once again the federal government has been caught out without a single policy solution to accommodate the unprecedented surge in international students and other migrants, coming at an immense cost to Australians,” Wild said.

“Government has been caught out without a single policy solution to accommodate the unprecedented surge in international”

IPA noted that a net of 1.755 million new immigrants are set to call Australia home between 2023 and 2028. Almost two-thirds of the more than 400,000 net new migrants in the financial year ending 2023 have arrived in Australia on student visas, it said, while they will account for a further two thirds of the subsequent year’s net migration intake.

“The consequences of the unprecedented influx of international students are not just felt by Australians but also the international students themselves, whose educational experience suffers as a result of issues associated with a lack of housing availability, especially in Australia’s capital cities,” it said.

The pressure has been compounded by a “rapid recovery” in the stock of international students, with second and third-year students who had been studying online during the pandemic returning, plus those arriving in Australia to begin their studies, as the May budget 2023-24 acknowledged.

The 187,000 net new international students expected to arrive in this financial year is equivalent to 55% of new housing supply, IPA added.

“We need to have an honest conversation as to the appropriate number of international students we can accommodate while not leaving Australians out in the cold,” Wild added.

“The recently announced unsustainable jumps in migration will put further pressure on critical economic and social infrastructure, such as schools, roads, and hospitals, and will only further add to the acute and immediate shortage of housing.”

A report from Savills in December 2022 suggested that the supply pipeline for Purpose Built Student Accommodation for the next two years is “muted”, with only 4,979 beds expected to become operational in 2023.

The cost of acquiring land for development is “very competitive” and building cost inflation continues to impact viability, the report said.

The IPA research looks at the entire housing supply in Australia, including apartments, detached houses or any other types of housing.

It notes that the housing supply has declined and “is expected to continue to decline” from a high of almost 200,000 units annually pre-pandemic to a low of 127,500 in 2025.

Factors include inflation-induced rise in interest rates, the increasing cost of building materials, the increasing cost and scarcity of labour and delays due to weather conditions and red tape, it noted.

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