How will declining international student numbers affect the rental market

With recent reports of international student numbers dwindling by as much as 40% it will be interesting to see how this affects the tight rental market and rental values. The result could be less income for landlords but better value for international students (and students generally) who are in Australia and also for low income earners.

The value of international students to the Australian economy:

The international student industry pumps $3.8 billion dollars into the economy each year. However recent changes to the Skilled Occupation List that make it harder for students to gain permanent residency coupled with recent violence against international students has seen many potential university attendees turning to the USA and other countries for their study needs. The International Education Association is predicting a fall of over 100,000 international students in the next year with more reductions to follow which will have obvious flow on effects for the economy and the rental housing market.

The impact of fewer international students on the rental property market:

For landlords this is may not be good news. With demand for rental properties still very high, landlords can charge a premium for affordable housing near universities. Students will go to great lengths to secure these, so landlords currently have the upper hand. This may however all change with demand sure to decrease in the coming year. I have heard first hand from a higher education institution that some landlords are finding it difficult to fill bedsits that were once highly sort after.

For current and future international students the new Australian legislations and perceived danger of violence could provide some relief for cash strapped students. The Age recently ran an article about foreign students who were forced to live 10 to a room and sleep in shifts, in order to afford their accommodation. Less demand may mean things become more affordable for them.

Non-international students and people looking for affordable housing may also benefit from the decreased demand.

If, as some experts predict, even more reductions in international student numbers occur Australia wide, it will be interesting to see the onflow effect to the property market as a whole. However with the second term in full swing we will probably not be able to see the true impact on the market until 2011.