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The government's rush to cash in on the $40 billion international student industry has negatively rocked the rental market, a think tank has warned, claiming that record numbers of foreign students have sucked up housing stock and inflated prices.
According to the Institute of Public Affairs (IPA), in the last financial year the federal government oversaw the largest ever net intake of international students, more than 250,000 people which doubled the previous high of 122,000 in 2009.
IPA research found, on average across Australia, new international students took up 70 per cent of the net new housing units supplied to the market, leaving just 30 per cent for the rest of the nation, including other freshly arrived migrants.
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The vast majority of students live in rental accommodation, and IPA executive director Daniel Wild blamed the large numbers of students entering the country as a major contributing factor to severe housing shortages and rapidly rising tenancy costs.
Despite the rental market becoming increasingly tight over the last 18 months, the government is expected to bring in a further 187,000 net new international students this financial year, the IPA study said.
The think tank claimed the government had "no apparent plan" where they will be housed or how to absorb the extra pressure on infrastructure such as roads and public transport.
"Australians are entitled to ask how they can find a home as inflation drives up mortgages and rent prices become unsustainable, yet the federal government has presided over the largest intake of international students who filled the equivalent of seven out of 10 new homes," Wild said.
"While international students are an important market for our tertiary education sector, the first job of our leaders must be to ensure that there is adequate housing stock for those looking to get their first home or are in need of a rental."
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IPA research in June showed Australia is set to face a housing supply shortfall of over 252,000 homes between 2023 and 2028.
A significant contributor to the shortfall is the unexpected increase in net international student arrivals, Wild said.
"We need to have an honest conversation as to the appropriate number of international students we can accommodate while not leaving Australians out in the cold."
Unsustainable jumps in migration would heap more pressure on critical economic and social infrastructure, he said, such as schools and hospitals.
Wild said it was imperative the government finds a policy solution to ensure the lucrative international student sector does not adversely contribute to the shortage of housing.
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According to Universities Australia, a peak body which represents 39 member universities, international students contributed $25 billion to the economy last year, underlining the balancing act Canberra must navigate.
In 2019, pre-coronavirus, the organisation claimed international students were worth $40 billion to the economy, a dollar estimate which is disputed by IPA.
"This figure should be treated with scepticism," the IPA report cautioned.
"A large share of international students arrive in Australia with the expectation that much of their expenses and tuition will be paid for by working in Australia, not with money earned overseas."
In February, Universities Australia chief executive Catriona Jackson said the return of international students was a vital economic boost amid a tough fiscal landscape.
"The export income our universities help generate pays for essential services and underpins a higher standard of living for all Australians, regardless of where they live," Jackson said.
She praised the "powerful and far-reaching contributions" students from over 144 countries make when they arrive, enriching Australia's social and cultural fabric.
"We need more of this," she said.
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The international student sector was hit hard during the COVID-19 pandemic but has now quickly bounced back after borders reopened.
There has been a rapid return of international students, skilled temporary visa holders and working holiday makers in the last year.
Almost two-thirds of the more than 400,000 net new migrants in the most recent financial year have arrived in Australia on student visas, the report said.
Between January and April this year, 590,566 international students were enrolled in 648,700 courses across the country.
Students from China and India make up almost 40 per cent of all international students in Australia.
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