Foreign students 'unfairly blamed' for Australia's dire rental market, claims housing group

International students are not competing directly with families in the rental market as they typically prefer inner-city apartments over standalone homes in the suburbs, new research suggests.

Australian renters have experienced eye-watering rental increases over the past few years and stiff competition for available properties, with vacancy rates hovering around record lows.

Fingers have been pointed at international students returning after borders reopened.

However, the property industry research challenged this narrative and said there were a range of pandemic-fuelled housing trends and long-term structural issues at play.

The study commissioned by the Student Accommodation Council found only three per cent of international students lived in detached houses, with the vast majority - 74 per cent - in accommodation purpose-built for the cohort close to universities.

Another eight per cent were living in apartments.

The research from the Property Council offshoot also found international students made up a small four per cent slice of the total rental market.

The push for more space and converting extra bedrooms into home offices during the pandemic, as well as the flight of inner-city folk to the regions and the rise of solo living, were deemed partly responsible.

Rising construction costs and skills shortages have also been holding up new supply, along with the higher cost of finance as interest rates went up.

The conversion of rentals into short-stay accommodation has also played a role, particularly in tourist hotspots.

'International students have been unfairly blamed for the rental crisis, yet this report shows that long-term structural issues in Australia's housing market are the real cause for rental pressures,' Student Accommodation Council executive director Torie Brown said.

A broad spectrum of issues was driving up rents, Ms Brown said, and no single cohort was to blame.

The timing of rental increases further suggested the return of students had a limited impact on the rental market. For example, prices started rising in 2020, which is when international students had largely returned home as borders shut.

Yet despite these findings, the council said there was also an expected shortfall of new student accommodation.

A failure to step up new supply from current levels would result in an extra one per cent of students entering the private rental market, it said.

Separate analysis from real estate data firm CoreLogic found high overseas migration was correlated with higher rents, but the link was short-lived and weak.

'The only migration-housing performance relationship demonstrated in the data over the short term, and weakly at that, continues to be between overseas migration and rents,' the report read.