A snapshot of Australia’s student housing market

SOURCE: Anders Jildén/Unsplash
Despite the investment boom, student housing remains in short supply in Australia.

By U2B Staff 

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As Australia continues to grow as a choice destination for overseas students, investments into the purpose-built student accommodation (PBSA) sector are pouring in, leading to concerns of a potential oversupply.

But market observers say these are misplaced fears for now, with burgeoning student numbers expected to absorb, and just as quickly outstrip, current and projected future supply.


Education is Australia’s third-largest export, worth over AU$33 billion last year in fees, goods and services, a 15.5 percent increase from the previous year.

This is projected to grow, driven by a number of factors such as a depreciating Australian dollar making the destination a more affordable choice, especially for students from emerging market economies in Southeast and South Asia.

Other factors include a growth in applications and approvals of student visas, and an uptick in the number of domestic students studying interstate.

Recent political events in traditional markets like the US and UK have also been credited for diverting some of the influx to Australia, today the third most popular study abroad destination in the world. There was even talk mid-last year that Australia was creeping past the UK to take second place, the result of prolonged uncertainty over a deal-or-no-deal Brexit.

Last year, international enrolments in Australia went up by 14.3 percent to hit nearly 800,000 students, representing 7 percent of the world’s five million foreign students. In the last five years, enrolments have increased by an overwhelming 73 percent. 

The PBSA market has expanded as a result, but numbers show the rate hasn’t exactly been commensurate with enrolments.


According to recent research by real estate services firm JLL, a growing pipeline of new product will see the sector swell to 100,000 beds by December 2022. By the end of this year, approximately 86,000 beds will come online across the country’s six largest student markets, representing a 12,000-bed increase in just a year.

Yet, there remains a shortfall in supply.

In 2022 Sydney, the increase in bed count would still mean there’d be 4.7 students to every available bed. In Melbourne, the ratio is even worse at 5.2 students per bed. On the whole, the supply would only account for one bed for every 11 students.

Monash University student accommodation
An aerial view of Multiplex’s new eco-friendly student accommodation precinct for Monash University at the Peninsula campus in Frankston, Australia. Source: Multiplex

Already, the shortage is proving dire for Australia’s foreign student cohort.

The limited supply of student beds is reportedly pushing them into an informal and under-regulated private rental market, and leaving them vulnerable to exploitation by unscrupulous private landlords. The University of New South Wales (UNSW) Human Rights Clinic made this discovery following an 18-month investigation of the conditions in Sydney, the second most popular city for international students in Australia.

In its report entitled No Place Like Home released this week, the clinic said limited on-campus student accommodation options in the city have forced foreign students to rely heavily on private rentals.

But as costs and other barriers render formal channels inaccessible to the cohort, many instead live in shared housing and boarding homes, among other insecure arrangements in a marginal rental sector where legally-binding tenancy agreements are few and far between.

As a result, some find themselves wrongfully or abruptly evicted; have their bond payments arbitrarily withheld by landlords; are subjected to poor living conditions or arrive to the country only find they don’t even have housing, despite paying their deposits months prior.


But without a rental agreement to provide them protection under the Residential Tenancies Act 2010, they are unable to contest or prove any of this.

The clinic, in a list of recommendations to remedy the problem, urged the authorities to establish a support system for future victims of such housing scams and take preventative measures to stop the exploitation entirely. 

Most importantly, it called on the relevant stakeholders to do something about the shortage of affordable housing options for international students. It suggested that local councils work with developers to incentivise the construction of affordable housing for students not able to fork out exorbitant rates for luxury digs in prime locations.

The problem of access to safe and affordable housing, the clinic noted, isn’t one unique to Sydney. 

Atira Peel Street
The Atira Peel Street student accommodation in Melbourne. Source: University Living

One major cause is likely this: it seems despite education being Australia’s third-largest export, policy and laws to provide international students with the necessary access to protections in the housing market are sorely lacking. 

Universities are not required by local legislation to provide housing to the international students they enroll.

According to a spokesperson for the Department of Education and Training:

“There are no regulations or policies that require universities or international colleges to provide a certain number of rooms to international students.

“Under the National Code of Practice for Providers of Education and Training to Overseas Students 2018 (National Code), prior to enrolling an overseas student, registered providers must inform the prospective student of options and indicative accommodation costs.

“State and territory governments are responsible for regulating tenancy arrangements in their respective jurisdictions, including homestay arrangements.”

This means upon gaining acceptance into a university, the responsibility of finding accommodation immediately lands on the student. And with real estate agents typically requiring references for employment and rental histories for private housing rentals, it’s not surprising that students coming in from abroad or interstate would seek options outside formal channels to secure housing. They’re getting squeezed from both ends, after all.


Considering these conditions, we can reasonably suppose Australia’s student housing sector is in dire need of attention, perhaps even a complete do-over. And apart from a policy change or legislative overhaul, the numbers beg the conclusion that further PBSA development could provide the much-needed salve.

As JLL’s findings point out, Australia has some of the world’s lower market penetration figures, indicating a real need for PBSA investments.

And against a backdrop of a depreciating Australian dollar and an international education sector that’s only set to expand, the sector presents a real growth opportunity for domestic and international investors. Unlike other property asset classes, occupier demand for PBSA units is less cyclical and less volatile to macro variables–a key reason behind growing institutional appetite for prime operational assets.

“The opportunities we are seeing coincides with an overall increase in the global mobility of students – and Australia remains a popular destination particularly for students coming from China, India, Korea and other Southeast Asian countries,” notes Daniel Erez, Managing Director of real estate investment management group, Newground Capital, in The Urban Developer.

“In the US and the UK the student accommodation sector is already quite developed and global appetite is growing.”

In fact, there are reports to suggest that record institutional investments in recent years have pushed some university towns in the UK to a point of saturation.

This, Erez notes, bodes well for Australia.

“As Australia starts to catch up with demand, it presents opportunities for investors to diversify their portfolios beyond the established markets in the States and United Kingdom.”