Immigration changes lead to drop in demand for lower-end student housing

Landlords providing student accommodation at the cheaper end of town are unlikely to see an increase in rents, due to a drop in the number of international students undertaking vocational training in Australia.

Figures put out by Australian Education International for the year to March 2011 reveal an overall 8.9% decline in enrolments by full-fee international students on student visas.

Digging deeper, the AEI figures show that demand for vocational education and training visas fell by 21% over the year to March 2011, while higher education visas grew by 3.6% during the same period.

Overseas students enrolling in TAFE courses generally apply for VET visas, while those attending university apply for HE visas.

As a consequence, demand for the cheap housing usually sought by overseas TAFE students has fallen, but the more affluent student market remains buoyant.

This is reflected in the lopsided situation facing student accommodation providers such as Student Housing Australia, which has a portfolio of 2,200 apartments in Melbourne.

The organisation says demand for its apartments near TAFE colleges has dropped, but its apartments servicing RMIT, the University of Melbourne and Monash University are full, with students on waiting lists.

Mark McDonald, director of SHA, places the blame for this not on the high Australian dollar – as many have claimed – but on changes made to permanent residency rules introduced in January 2009.

“The high dollar is not a factor. When the Australian dollar went from 55 cents to 80 cents and then 90 cents, it had no effect on demand,” he says.

What has had the most damaging impact, according to McDonald, are changes made to immigration rules limiting the number of courses that give students extra points towards permanent residency applications.

Obtaining a cooking or hairdressing qualification was once seen as an easy route to becoming an Australian resident, but in January 2009, the Department of Immigration stopped accepting permanent residency applications from applicants who had completed these courses.

And it appears the government has toughened up its policies of late.

In January, TAFE Directors Australia chairman Bruce Mackenzie lamented to The Australian that an easing up of assessments for students applying for higher education courses while maintaining tougher risk assessment for vocational applicants was discouraging overseas vocational students.

The flow-on diminished demand for cheaper housing has caused some landlords to spruce up their properties to appeal to the higher end (and higher education end) of the market.

Ben Bassingthwaite, property manager at Century 21 Westside in Brisbane, who says rents have stalled in lower price brackets, notes an improvement in the quality of student accommodation in Fortitude Valley to appeal to the more affluent end of the market.

“Australian students tend to rent more expensive properties compared to Asian students,” he says. “Overseas students are looking for cheaper accommodation. They are more accepting of smaller rooms and bathrooms.”

McDonald believes the government has shot itself in the foot by changing the immigration rules.

“Because New Zealand has not changed its permanent residency policy, students are now going there to do their vocational training, becoming New Zealand residents and then coming to Australia,” he says.

SHA rents out private studios for between $200 and $350 a week, and students sign year-long leases.

Bassingthwaite says weekly rents in Fortitude Valley range between $100 and $140 a week.

“Ninety dollars a week will get you a fairly rundown room,” he says.