Return of overseas students could place further pressure on rents

Return of overseas students could place further pressure on rents

An expected increase in the number of overseas students coming to Australia following the Chinese government’s order for students to return to face-to-face study could lead to rent increases of five per cent or more, one expert predicts.

Under orders from the Chinese government, 50,000 or more students could return to Australia in the coming weeks, according to one estimate.

Kent Lardner, founder of Suburbtrends, told The Australian Financial Review that suburbs close to universities will see the highest number of students.

“The return of the Chinese students is likely to make this competition quite fierce, and I expect to see rent increases of at least five per cent in the next four weeks or so,” Mr Lardner told the AFR.

He said the return of Chinese students would come at an already busy time for the rental market.

“We usually see an increase in vacancy rates in the suburbs around the university campuses over the Christmas holidays, but in the coming weeks students will return, and new students will begin their search, which will see vacancies quickly drop below one per cent in most suburbs,” Mr Lardner said.

Louis Christopher, managing director of SQM Research, told the AFR that the boost to the number of overseas students would affect the Sydney and Melbourne markets the most.

“It is probably safe to assume that many of these students will want to live in these cities, Mr Christopher said.

“At this stage we only have hundreds of available properties in Sydney and similarly in inner city Melbourne, so there is the potential to create a problem on top of the issues we already have in the rental market.

“This is a significant development for the rental market, meaning vacancy rates are likely to fall back to record lows and drive rents higher, particularly in the inner-city areas of Sydney and Melbourne.”

Ray White chief economist Nerida Conisbee told Elite Agent that while it was unclear what proportion of China-based students had already made the return to Australia, it would put significant pressure on the rental market if 50,000 students returned.

“If they all have to come to Australia, it will put an enormous strain on housing demand,” Ms Conisbee said.

PRD Chief Economist Dr Diaswati Mardiasmo said that while Australia’s current level of international students remained lower than it was before Covid, it was not far off.

“Demand from international students is not yet at pre-Covid levels, (but) it will continue to increase,” said Dr Mardiasmo.

“Particularly with our borders now fully open, Australian education providers are intensively promoting their institution, and our reputation, when it comes to COVID-19 management.

“However, data shows that it is not that far from pre-Covid levels … We are about 150,000 short, which is still a large number, but it is not a situation where we are currently only 20 percent of pre-Covid numbers haven’t – in fact we’re at 81 per cent.”

She said that a return to pre-Covid student numbers would put further pressure on rents, but that it would not be dramatic.

“Because we will continue to see growth in the number of international students, we will continue to see rental price increases, especially for units (as this is the property type that most students apply for), but I wouldn’t say it’s a huge jump,” he said. she said.

Rent already sky high

City rents are already under pressure following the relaxation of border restrictions in early 2022.

The latest Domain Rent Report shows that Australia has recorded its steepest annual rent increase on record in 2022.

Across the combined capital cities, house rents rose by 14.6 per cent while units rose by 17.6 per cent, with rents at record highs in all cities except Darwin, and in Perth for units.

Domain Head of Research and Economics, Dr Nicola Powell, said the rental market had become unusually tight due to increased tourism and overseas migration.

Foreign students have also put increased pressure on supply, fueling the landlord’s market and putting increased pressure on tenants across much of the country.

“Nationally, asking rents are at historic highs in all cities (except Darwin and units in Perth), rents are rising at the fastest annual rate ever seen in the combined capital cities and the number of vacant rental properties is at an all-time low for the month of December,” said Dr Powell.

Move to face-to-face learning

The mandate to return to face-to-face learning is not unique to the Chinese government, with many training institutions introducing face-to-face exam requirements in response to the rise of AI-powered software such as ChatGPT.

Australia’s Group of Eight universities announced earlier in January that they were reviewing how they will conduct assessments in 2023 due to emerging technology and the potential for fraud.

This included a return to proctored exams with pen and paper, according to The Guardian.

In the real estate sector, changes to the Continuing Professional Development Requirements will require agents to participate in interactive sessions.

In an exclusive interview to be published in the next issue of Elite Agent magazine, NSW Property Services Commissioner John Minns said the changes would help prevent unsavory practices, as such agents have someone else do their CPD for them late completion, as well as incorporating the learning. .

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