- International students no longer coming to Australia is set to have major economic ramifications, including to the property market.
- A new report from the National Housing Finance and Investment Corporation (NHFIC) projects demand for housing will fall by 232,000 over the next three years as a direct result of international admissions dropping.
- The report also warns of a fallout in rents and prices, and foreshadows the greater impact to construction, population growth and the broader economy.
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With the flood of international students into the country reduced to a trickle, Australian industries are beginning to wise up to the costs.
On Monday, the federal government shed some light on what the property industry and others can expect as overseas demand for a place to live plummets.
The National Housing Finance and Investment Corporation (NHFIC), a federal government entity, has predicted that the lack of international students means that as many as 232,000 dwellings won’t be needed over the next three years.
With migration behind almost six in every ten new Australians – and students accounting for half of those – this worst-case scenario has the population shrinking by 0.8% over two years.
If it were to arise, it would be an outcome that “has only been surpassed by World War I and the unwinding of the peak of the baby boom in 1971”, the NHFIC wrote in the new report.
Of course, there’s plenty of variables at play in those figures, but even under the best possible outcome foreseen, the corporation’s beancounters say demand for property will fall by at least 129,000, with a long road to recovery.
“The global financial crisis (GFC) revealed that economic factors, including unemployment and the exchange rate, are important for international students studying in Australia. It took around four years for student numbers to recover to pre-GFC levels. A protracted COVID-19 recession could easily lead to a similar path of recovery once borders reopen,” the NHFIC said.
It’s not helped by the fact that two major markets, India and Brazil, are two of the countries worst affected by the pandemic.
The smallest impact projected by the Corporation has borders opening next year for students, with numbers getting back to pre-pandemic levels by 2027.
Under the worst scenario, international students would be back at just 60% strength by the same year.
Migrants and international students have long helped fuel Australia’s economic growth
The impact of “aggressively” closing borders is already revealing itself. Vacancy rates have surged in capital cities and slashed rents, especially in inner-city areas.
However, it won’t just be landlords feeling the sting.
International students contributed more than $37 billion to the economy last year, with education ranking as Australia’s third-largest export after iron and coal.
The NHFIC notes falling demand could translate to new slack in the construction industry, which will only “add to the recessionary forces” plaguing the economy.
A recession in turns brings less demand for skilled migrants and visa holiday workers, hurting the recovery again. Recessions also tend to dampen the natural birth rate, the NHFIC notes.
The impact is made larger again when you consider again the flow of jobs and consumption for which the student market is responsible.
Figures provided last week to Business Insider Australia showed that at least 11,100 university staff have already lost their jobs as institutions try desperately to cut costs.