Australia Predicts a 7000-bed Shortfall over the Next Five Years Amidst Rising International Enrollments

Australia, known for its world-class education system, has experienced a surge in international student enrollments in recent years. However, this influx has highlighted a pressing issue, which is a significant shortfall in student housing. Despite efforts to expand accommodation options, Australia faces an annual shortfall of 7000 beds for the next five years, posing challenges for students and developers. This shortfall is due to a combination of factors, including high construction and finance costs, lack of land available for new development, and stringent planning controls. This has made it difficult to build new student accommodation facilities. In this article, we delve into the data, explore the demand-supply gap, examine construction challenges, and offer insights into potential solutions.

Resurgence in Australian International Students

Student housing demand has increased by 4% compared to 2019, driven by a full recovery of international student numbers over the past year, as per Australia education news. According to the latest Erudera report, as of January 2024, international students enrolled in Australian higher education institutions stood at 44,740. This is slightly lower than January 2019, when international students enrolled was 45,070; the decline is slight at 0.7%. With the number of 44,740 international students in 2024, colleges and universities welcomed 19,770 international students in January 2022 and 30,250 international students in January 2023, according to the Erudera data. Despite the improvements in higher education, there is still a long way to go in terms of international student numbers across all educational sectors.
According to the Australian Bureau of Statistics, “In January 2024 there were 82,890 international student arrivals to Australia, an increase of 23,660 students compared with the corresponding month of the previous year. The number of student arrivals in January 2024 was 8.1%  lower than the pre-COVID levels in January 2019.”

We do not want [the international student population] to grow as fast as it has been growing in the past few years,” Home Affairs Minister Clare O’Neil 

According to the Department of Home Affairs, the rate of student visa applications being rejected is at an all-time high. In the last six-month period ending December 2023, more than 80% of applications for student visas were approved, the lowest percentage since the five-year period beginning in 2005/06. The rate is also lower than the 86% it was in 2022/23 and the 90.5% it was during the 2021/22 academic year.

Australia’s Sourcing Countries for Students

The top source countries contributing international students studying in Australia include China, India, Colombia, and Pakistan. These countries represent a significant percentage of the total international student enrollment in Australia. China and India are fueling the way in terms of student growth, with 107% and 94%, respectively, followed by Colombia with 94% and Pakistan with 54%, as per Australia education news.
Jack Bergin, head of living on the Australia capital markets team at JLL, says, “Australia’s consistently strong university rankings, connectivity to Asia, and the quality of student life have all been key pull factors for international students studying in Australia.” 

Source: Statista

Demand and Supply Mismatch

The Australia student housing sector is facing a significant demand and supply mismatch, leading to a critical shortage of accommodation. This shortage is particularly in cities like Sydney and Melbourne, where the demand for student housing is high due to popular universities and lifestyle factors.
Despite recent increases in supply, additional beds are still required to meet the growing demand for Australia student housing. According to Australia education news, between 2024 to 2028, only 3500 student beds will be created annually but it may be deferred as development feasibility remains a challenge. This shortfall is particularly problematic given the surge in international student enrollment, which is projected to grow to 940,000 by 2035. The shortage of affordable Australia student accommodation has led to a housing crisis, with students resorting to unregistered, overcrowded rooming houses facing issues with cleanliness and maintenance. According to JLL’s analysis, there’s an underlying demand of 10,500 beds annually over the next 5 years, which translates to a shortfall of 7,000 beds. The mismatch between supply and demand is expected to persist, with forecasts indicating that only a limited number of new purpose-built student accommodation (PBSA) rooms will become operational in the coming years.

Operators' Strategic Responses

In response to this acute shortage, operators such as Castle are looking to maximise their current capacity, with their sites booked out for 2024 and seeing significant yield increases. Other operators and property developers, meanwhile, are accelerating their plans to build new accommodation. For example, Western Australia property developer Exal Group has started construction on a new 960-bed property in Waterford, demonstrating the industry’s urgency to fill this critical gap and meet the growing demand from international students.
Australia student housing shortage spotlights urban and infrastructure planning issues and underscores its status as a top choice for higher education. As the Australian international student community continues to grow, we must find innovative solutions to address these issues.

To sum up, Australia student housing shortage comes at a time when international enrollment is on the rise. This data highlights the urgent need for policy, university and private sector action to close the gap between demand and supply. Simplifying regulatory processes, providing incentives for affordable housing development and harnessing innovative construction approaches are just a few of the ways Australia can prioritize student housing infrastructure. In order to create a better learning environment for Australia’s diversified international student population and strengthen Australia’s reputation as a top education destination.

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