The year 2021 ended with the welcome news that Australia would allow fully vaccinated international students to return to the country after Prime Minister Scott Morrison said Australians would have to learn to live with COVID-19. However, will this welcome news lead to the rising cost of student housing in Australia?
Reports suggest that this could be a yes. Rent in cities such as Sydney and Melbourne were previously cheaper with the absence of international students in Australia, but the cost of student housing in Australia could rise as students return. Morrison announced incentives, including allowing students to enjoy visa rebates for the next eight weeks and the relaxation of working hours to lure students back.
There are many types of student housing in Australia for international students, including university accommodation and private rentals. Many students in Australia depend on part-time jobs to pay their rent, and the temporary relaxation of students’ working hours could be helpful for students who can afford to work longer hours.
The Urban Developer reported that hopes are high student visa changes will bolster flagging inner-city rents and top up workforces as Australian capitals figure among the most popular places in the world to study. The incentives announced by Morrison aims to address labour shortages in Australia fuelled by rising Omicron cases. This would also support hard-hit inner-city rental markets and providers of student housing in Australia, said the report.
Popular cities for student housing in Australia
Australia is home to several cities that are ranked among the best student cities in the world. The best cities for student housing in Australia include Melbourne and Sydney, which are listed among the top 10 in the 2022 QS Best Student Cities. Brisbane ranked 29th on the list while Adelaide and Perth were equal 35th, Canberra 37th and the Gold Coast 89th.
Quoting data from Corelogic, The Urban Developer said the inner-city rental market had suffered a big blow — rents fell between eight to 20% in inner Melbourne. Sydney’s inner-city rent also dropped, around 3.1% between March 2020 and October 2021. The Savills Australian Student Accommodation 2021 report showed that in early December, operators had 50% booking rates, a significant increase since border relaxation.
“As rental markets continue to tighten, and become more expensive overall than pre-COVID, alongside the historic undersupply of student accommodation, Savills expects the prompt recovery of purpose built student accommodation occupancy and rents,” Savills Australia operational capital markets director Paul Savits was quoted saying.
“The residential rental markets in several capital cities have bounced back from a period of softness in 2020 with decreasing vacancy rates and increasing rental levels.” He added that lower supply levels due to owner occupiers buying apartments and limited completions of new apartments has led to constraints in the market.
“This trend will continue into 2022 and will be exacerbated by increasing levels of demand from students and non-students for rental accommodation once the international border opens,” he said.
Separately, quoting data obtained from SQM Research, the Daily Mail reported that rents are surging across Australia, with house or unit leasing costs soaring by double-digits in every major city except Melbourne during the past year. For most of the pandemic, rental vacancies have been tight in regional areas near the beach and in the smaller capital cities, but renters have had more choice in Sydney and Melbourne, it said.
The absence of international students in Australia meant rents were much cheaper in Sydney and Melbourne, but that’s changing now with the country’s border reopening to students in December.
Central business district rental markets in Sydney and Melbourne now have vacancy rates of 5.7%, but it still marks a big drop from May 2020, when Sydney’s CBD vacancy rate stood at 16.2%, it said. Rent in Sydney, in particular, has surged, with weekly median house leases climbing by 14.5% during the past year to 735.70 Australian dollars.