Students from China make up 27 per cent of all residents living in student accommodation. Picture: NCA NewsWire / Christian Gilles

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Foreign students returning to Australia will put further pressure on already surging Sydney rents, especially in the inner west, as the increased demand whittles away the low supply of available rental stock.

The Chinese government recently announced a mandate to force university students studying abroad to return to face-to-face learning and the influx of students is putting pressure on an already tight rental market.

Recent figures released by real estate group Raine & Horne indicated that vacancies in the inner west were particularly strained, with rates recorded under one per cent.

International students are expected to return to Australia in February Picture: NewsWire / Monique Harmer

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The area includes Sydney University, the University of Technology, and the Royal Prince Alfred Hospital – a major teaching spot for student nurses and doctors.

Sydney is not alone in this situation, with a 2022 report released by the Student Accommodation Council (SAC) showing many Australian cities were at capacity for purpose-built student accommodation beds.

Brisbane, Perth, and Adelaide in particular were expecting zero vacancy rates this year prior to the Chinese government announcement.
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Many capital cities across Australia were expecting zero vacancy rates this year prior to the Chinese government announcement.

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Raine & Horne Newtown co-principal Gerard Hill said the current rental situation can be linked back to changes made to NSW tenancy laws in 2020.

“We currently have less than 20 properties out of 1800 available for rent or about to become vacant, with as many as 30 groups at inspections.

“We expect vacancy rates will be squeezed further as new and existing university students flood the rental market in February looking for mostly shared home-type accommodation.”

The rental market will be flooded by university students looking for shared home-type accommodation. Picture: NCA NewsWire/Bianca De Marchi

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Data collated from the SAC last year showed students from China made up 27 per cent of all residents living in purpose-built student accommodation, followed by domestic Australian students at 26 per cent.

Executive director of the SAC Torie Brown said that the supply pipeline for student accommodation is expected to be muted over the next two years, with much of the supply of new beds in 2024 coming to Sydney and Melbourne.

There have been calls for the NSW State Government to prioritise the development of new student accommodation as student numbers grow. Picture: NCA NewsWire / Nicholas Eagar

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“Governments at all levels need to prioritise the development of new student accommodation because it provides appropriate housing exclusively for students and stops them from competing with mums and dads in the rental market.

“Expedited planning approvals, removing taxes like foreign investor fees and planning systems that prioritise student accommodation close to places of study should all be a top priority for policy makers.”