Daniel Wild On Rental Prices And Effect Of International Student Intake ABC FNQ

The Institute of Public Affairs’ Deputy Executive Director, Daniel Wild, joined Adam Stephen on ABC Far North Queensland to discuss the pressure caused by the federal government’s unplanned, record high international student intake that alone is costing approximately up to $1,040 per household per year.

Preliminary IPA research into the relationship between net international student intake and annual rent increases from 2005-2023, suggests periods of high net international student intake are associated with spikes to average rental prices.

All media appearances posted onto the IPA website are directly related to the promotion and dissemination of IPA research

Below is a transcript of the interview.

Adam Stephen:

It’s hard enough trying to get a rental at the moment in Queensland if you’ve got a full-time job and you’re a long-term local. So how in the world are international students who might only be working part-time or not at all managing to secure a rental? New analysis from conservative think tank, the Institute for Public Affairs, is highlighting something many of you probably already suspected: allowing vast numbers of students into Australia at a time the rental pool is so ridiculously stretched is only driving rents up further. Daniel Wild says universities assume limited or no responsibility for housing their students that they profit from educating, and this maybe needs to change in Australia.

Daniel Wild:

Yeah. So our analysis has identified that in the last financial year, the government oversaw the largest ever net-intake of international students at more than a quarter of a million. And this is putting significant stress on the housing market, pushing average rents up by $20 a week, which is around $1,000 a year. And this is on top of already rapidly rising rental prices. So over the last year, for example, across the nation, rents increased by close to 5%, and that’s on the back of another increase. So this is putting very significant pressure on the housing market, and these demand pressures are driving up prices, making it more difficult for Australians to get into a property.

Adam Stephen:

We did have a couple of years though where international student intake was minute, to say the least. Are we not just making up for lost time with these numbers this year?

Daniel Wild:

Well, you’re right to point out that the COVID pandemic obviously had a very big impact on international students. The issue here is a lack of planning. It’s conceivable that we could accommodate a large increase to international students and migration more generally. But the government and universities have not at all planned for the increase in students, whether it’s to make up for the lost COVID years or not. The government had a migration review a few months ago, and they reinforced their commitment to a record intake of 1.5 million migration over the next five years. But there was no discussion of the schools, roads, hospitals, and houses, and the pressure that this record intake to migration will place on those critical economic and social services. So the fundamental point is governments and universities need to be planning for the students and the migration that they’re bringing in.

Adam Stephen:

It was once the case where universities did have quite a lot of accommodation options available for students, and that obviously a lot of those accommodation houses of residents and colleges still exist. But are they just not able to house everyone because of how large these numbers are?

Daniel Wild:

Yeah. You’re right to say that some universities provide accommodation. And some international students are assisted by universities, but the majority of international students are in the private rental market. I mean, for example, this morning, the vice chancellor of University of Newcastle, in response to our research, agreed with us that accommodation is an issue when it comes to international students. And so this gets to a real issue, which is that universities get a very significant private benefit from having international students in that they bring in a lot of revenue that goes to those universities. But some of the costs of those international students are pushed onto the public and taxpayers, for example, in higher housing costs and the pressure on infrastructure that taxpayers ultimately pay for. So universities need to have more skin in the game when it comes to accounting for and paying for the costs of international students.

Adam Stephen:

We had a real estate agent on only a couple of weeks ago who was calling for a pause on immigration until such time as housing supply can catch up with demand, and that’s someone who works in a sector that has nothing really to gain from reducing the amount of demand. Does it surprise you that a veteran real estate agent would make a claim like that, he says, because of how much human misery is coming through his doors and how difficult it is to have to keep turning people away that they can’t give rentals to?

Daniel Wild:

Yeah. Well, I think it’s revealing that that has happened because like you say, someone who’s in the business of wanting to sell houses, then they’re usually going to be quite happy with more demand. And I think it’s quite significant that someone in that industry has said, “Look. Hang on. This might be good for our bottom line, but there’s a lot of human misery resulting from this, and homelessness. It’s quite interesting that you bring up the issue of a pause to migration. So earlier this year, and this was in April of this year, we commissioned a poll by marketing research firm, Dynata, of around 1,000 Australians. And this was a nationwide poll. And one of the questions we asked is whether they think Australia should temporarily pause our intake of new migrants until we have adequate economic and social infrastructure.

And the results was 60% said, “Yes, we should have a pause,” and 28% said, “No,” and the rest weren’t sure. So there is fairly widespread concern in the community, and there’s a feeling that the current system is out of control. And a lot of people look at our country and say, “Well, we’ve got a massive amount of landmass, a massive amount of space. How is it possible that in our nation there’s people going homeless because they can’t find accommodation?” So look, I think that this is a really significant issue to many people across the nation.

Adam Stephen:

We are a nation of migrants, though. Is it not xenophobic to be suggesting we shouldn’t be allowing other migrants in?

Daniel Wild:

No. I don’t think it is. What it is, is a reflection on the concerns of a lack of planning. As you say, we are a nation of migrants and we are a very welcoming and tolerant nation, and migrants have played a really important role in our nation’s economic and social fabric and will continue to do so. But the migration has to be done on a sustainable basis. No one’s saying that we should never have more migration ever. I think the sentiment is more let’s do it properly and let’s do it in a way that’s sustainable.

There’s no real reason why governments can’t plan 5 or 10 years into the future and say, “Okay. We’re going to be bringing in X amount of new migration, and so we need X many houses and schools, roads, hospitals, and everything else to accommodate it.” And it’s just unclear why the federal government has missed the opportunity. Like I mentioned, they had the migration review. Well, there was no reason why they couldn’t have put in their planning to accommodate the massive increase to the migration in this international student number. So the issue from my perspective is one of planning rather than of migration as such.

Adam Stephen:

Hearing here from Daniel Wild from the Institute of Public Affairs. You’ve talked about the intake this year of international students, but you actually looked ahead for projections.

Daniel Wild:

Well, unfortunately, what our analysis suggests… and this is based on official government data as to the expected housing supply over the next five years… is that from this year until 2028, we’re expecting that international students will still be taking up about one in four houses that are supplied to the market.

Just by way of context, last year international students took up about 7 in 10 new houses that were supplied. So the shortage problem is expected to decline, but there’s still a shortage being baked into the figures. So unfortunately there’s no sign that this is going to ease up. And you mentioned the real estate agent before and people in the community saying, “Well, hang on. Maybe we need a pause.” This is where those sentiments are coming from, a realisation that even in the face of this irrefutable evidence that rents are rising and our infrastructure is under strain, I haven’t seen anyone from the government come out and say, “We’re going to address this problem right away.”

Adam Stephen:

If this doesn’t change, what do you suspect we’re going to see down the track?

Daniel Wild:

Well, we’re going to see more of the same. We are going to see unfortunately… I mean, you mentioned in Cairns a growing homelessness problem. I can’t see that getting better unless this problem is resolved. And I think we’re also going to see a hardening of the views in the community. We just discussed the sentiment that 60% want to see a pause, not just a reduction, but a pause to migration. And that really reflects a lack of leadership. Australia has always been an opening and welcoming country, at least since World War II, but I think that community sentiment is now saying, “Well, yes, we need to be open and welcoming, but how sustainable is our migration program when we’re seeing rental costs grow rapidly and no one from government seems to be actually taking responsibility for this?”

Adam Stephen:

So it’s Daniel Wild, deputy executive director at the Institute of Public Affairs, a conservative think tank. And they’ve run some analysis on what the international student numbers have done to the rental market, suggesting that the demand created by a huge number of students coming in over the past 12 months has driven rents up across Australia on average by about $1,000 a year or about $20 per week.

This transcript with Daniel Wild talking on ABC FNQ from 4 September 2023 has been edited for clarity.