Universities face housing test to ease pressure on Australia’s rental market

International students have copped a backlash in recent years amid Australia’s housing shortage, but a small rule change may help take some pressure off the country’s rental market.   

Universities will have to show they are creating additional student housing if they want to increase their international student numbers next year in a move aimed at easing rental constraints across Australia.  

The federal government has increased the number of international student places by 25,000 to 295,000 for 2026, but there’s a catch for the higher education sector. 

Public universities that want to take on more international students next year will have to show they are providing enough student accommodation for both domestic and overseas students.  

There has been fiery debate about Australia’s population growth and the resulting pressure on housing since the country reopened its borders in 2022.  

International students, who were likely to rent while they study in Australia, have been in the spotlight due to rising rents and a shortage of rental homes. 

Student Accommodation Council executive director Torie Brown said the move was a good outcome.

“Requiring universities to demonstrate their commitment to providing housing for students to grow their enrolments is a sensible and necessary step, and one that aligns with our calls for more collaboration between the higher education and student accommodation sector,” Ms Brown said. 

Universities will have to show they are creating additional student housing if they want to increase their international student numbers next year. Picture: Richard Glover/Getty

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Rental price growth has slowed down considerably from the peak levels seen over 2022 and 2023 but has still ticked higher across many parts of the country.    

The national median rent in the March 2025 quarter was 5% higher compared to the same time last year, according to PropTrack.   

REA Group executive manager of economics Angus Moore said rental market conditions had eased a little over the past year, although were still quite tight.  

“Fundamentally, the reason we’re facing such challenging conditions in rental markets comes down to not having enough rentals,” Mr Moore said.  

“Solving that over the long-term in a sustainable way comes down to building more rentals, and additional student accommodation will help.” 

Federal education minister Jason Clare said the move made sure international education grew in a way that supported students, universities and the national interest.  

“The new planning level gives the sector certainty to continue delivering a high-quality educational experience to international students, while addressing national priorities,” Mr Clare said.  

The government said public universities would also need to increase engagement with southeast Asia to boost their international student numbers. 

Shadow education minister Jonno Duniam said they were concerned that the full picture of the international student intake was not being taken into account.  

“The Albanese Government is continuing to operate an opaque planning system for international education and needs to give all tertiary providers clarity on how it arrived at these numbers while ensuring that there are no losers,” Mr Duniam said. 

The major parties had previously promised to cap the number of international student places in Australia to slow down migration into the country.  

There were an estimated 100,000 purpose-built student accommodation beds across Australia, with 35,605 additional beds in the pipeline, according to the latest research released in March.  

REA Group executive manager of economics Angus Moore said additional student housing would help.

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Overseas university students also rely on university housing and the private rental market.  

The federal government came under fire when net overseas migration peaked in 2023, with more than 550,000 overseas migrants arriving in Australia during the year to September 2023, according to the Australian Bureau of Statistics.  

The latest ABS figures show net overseas migration reached about 340,000 during the year to December 2024.