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24 July 2025<\/p>\n
COVID-19, education, housing, inflation, international, labour market<\/p>\n
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<\/p>\n
\n\t\t\t\t\t\t\t\t\tPhoto: freemixer \u2013 Getty Images
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<\/p>\n
\t\t\t\t\t\tAbstract<\/p>\n
\n\t\t\t\t\tInternational students play a significant role in the Australian economy. They contribute to demand through
\n\t\t\t\t\ttheir spending on goods and services and are an important source of labour for some Australian businesses.
\n\t\t\t\t\tThis article shows that international students tend to add more to demand in the economy than they do to
\n\t\t\t\t\tsupply in the short run, in large part reflecting their spending on tertiary education fees. In periods of
\n\t\t\t\t\tlarge swings in international student numbers or when the economy has little spare capacity, this means that
\n\t\t\t\t\tchanging international student numbers can affect macroeconomic outcomes, particularly in sectors of the
\n\t\t\t\t\teconomy where supply cannot respond quickly. The rapid growth in international student numbers post-pandemic
\n\t\t\t\t\tlikely contributed to high inflation over this period, but was not a major driver.
\n\t\t\t\t\t\t<\/p>\n
\t\t\t\t\tIntroduction<\/p>\n
International students play a significant role in the Australian economy by spending on goods and services
\n\t\t\t\t\t\tand providing labour for Australian businesses. The number of international students grew strongly after
\n\t\t\t\t\t\tinternational borders reopened following the COVID-19 pandemic; education
\n\t\t\t\t\t\texports are currently Australia\u0092s fourth largest category of export, at approximately
\n\t\t\t\t\t\t$50\u00a0billion in 2023\/24. International students have been an important
\n\t\t\t\t\t\tdriver of net overseas migration and GDP growth in recent years (Graph\u00a01).<\/p>\n
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<\/p>\n
Graph 1<\/p>\n
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t![\"A](\"https:\/\/www.rba.gov.au\/publications\/bulletin\/2025\/jul\/images\/graph-0725-2-01.svg\")
<\/p>\n
This article begins by stepping through developments in international student flows since the start of the
\n\t\t\t\t\t\tpandemic in 2020. It then examines the ways in which international students interact with and contribute
\n\t\t\t\t\t\tto the Australian economy, first by taking an economy-wide view of how international students contribute
\n\t\t\t\t\t\tto supply and demand, and then considering their specific interactions with the market for goods and
\n\t\t\t\t\t\tservices, the labour market and the housing market. Finally, it concludes by assessing whether large
\n\t\t\t\t\t\tchanges in international student numbers have affected macroeconomic outcomes in recent years. Throughout
\n\t\t\t\t\t\tthe article, our analysis primarily considers how international students interact with and contribute to
\n\t\t\t\t\t\tthe economy from a shorter run perspective; longer run effects are outside the scope of the work.<\/p>\n
\t\t\t\t\tRecent developments in international student flows<\/p>\n
Global demand for education in Australia grew solidly in the decade prior to the pandemic. This reflected
\n\t\t\t\t\t\ta range of factors, including rising household disposable income in Asia, the active promotion of
\n\t\t\t\t\t\tAustralia as an education destination, changes to migration policies that enabled higher education
\n\t\t\t\t\t\tstudents to work in Australia after their studies, global population growth, and the depreciation of the
\n\t\t\t\t\t\tAustralian dollar after the mining boom (Grozinger and Parsons 2020; Norton 2024). However, with the
\n\t\t\t\t\t\tintroduction of border restrictions in March 2020 to contain the spread of the COVID-19 virus, new students were unable to enter the country. As a result,
\n\t\t\t\t\t\tthe number of international students onshore fell sharply (Graph\u00a02).<\/p>\n
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<\/p>\n
Graph 2<\/p>\n
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t![\"A](\"https:\/\/www.rba.gov.au\/publications\/bulletin\/2025\/jul\/images\/graph-0725-2-02.svg\")
<\/p>\n
\n\t\t\t\t\t\tAfter Australia\u0092s international borders reopened in late 2021, the number of international students
\n\t\t\t\t\t\tonshore rose rapidly. While student arrivals quickly returned to around pre-pandemic levels,
\n\t\t\t\t\t\tdepartures were lower because there were fewer students onshore to depart. Overall, these
\n\t\t\t\t\t\tdynamics led to the international student stock rising sharply from just under 300,000 in 2022
\n\t\t\t\t\t\tto 560,000 by the end of 2023. Accordingly, international students were an important driver of
\n\t\t\t\t\t\tnet overseas migration during this period, accounting for around half of Australia\u0092s total net
\n\t\t\t\t\t\toverseas migration (Graph\u00a03). Spending by international students was also an important
\n\t\t\t\t\t\tcontributor to growth in consumer demand in Australia following the pandemic (Graph\u00a04).
\n\t\t\t\t\t<\/p>\n
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<\/p>\n
Graph 3<\/p>\n
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t![\"A](\"https:\/\/www.rba.gov.au\/publications\/bulletin\/2025\/jul\/images\/graph-0725-2-03.svg\")
<\/p>\n
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<\/p>\n
Graph 4<\/p>\n
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t![\"A](\"https:\/\/www.rba.gov.au\/publications\/bulletin\/2025\/jul\/images\/graph-0725-2-04.svg\")
<\/p>\n
As the student stock has recovered, the share of international students studying higher education courses
\n\t\t\t\t\t\thas risen, while the share studying vocational education and training (VET) and other types of courses
\n\t\t\t\t\t\thas declined. Most international students are from Asian countries, with Chinese and Indian students
\n\t\t\t\t\t\tmaking up close to two-fifths of those studying higher education courses (Graph\u00a05).<\/p>\n
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<\/p>\n
Graph 5<\/p>\n
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t![\"A](\"https:\/\/www.rba.gov.au\/publications\/bulletin\/2025\/jul\/images\/graph-0725-2-05.svg\")
<\/p>\n
More recently, growth in the number of students onshore has slowed. Student visa grants have fallen,
\n\t\t\t\t\t\tparticularly for VET students since mid-2023, and the contribution of international students to growth in
\n\t\t\t\t\t\ttotal consumer demand has fallen after driving growth following the pandemic. During this time, the
\n\t\t\t\t\t\tAustralian Government has tightened processing standards and increased requirements for student visa
\n\t\t\t\t\t\tapplicants, including by increasing proof of savings and English language requirements, raising visa
\n\t\t\t\t\t\tapplication fees, and introducing a Genuine Student Test, in which students must demonstrate they are
\n\t\t\t\t\t\tentering Australia for the purpose of studying (Norton 2024). The Government also reintroduced a
\n\t\t\t\t\t\tcap on how many hours international students can work (48\u00a0hours per fortnight during teaching
\n\t\t\t\t\t\tperiods). Nevertheless, the number of international students onshore is still near record highs, and
\n\t\t\t\t\t\ttimely Australian Bureau of Statistics (ABS) data indicate that student visa arrivals have exceeded
\n\t\t\t\t\t\tdepartures in recent months, suggesting the number of students onshore is growing.<\/p>\n
\t\t\t\t\tHow do international students interact with and contribute to the Australian economy?<\/p>\n
Given the significant number of international students in Australia, it is important to consider how
\n\t\t\t\t\t\tinternational students interact with and contribute to the Australian economy and, in particular, how
\n\t\t\t\t\t\tthey have added to both demand and supply in recent years. To do so, we begin with an aggregate
\n\t\t\t\t\t\tperspective before turning to the market for goods and services, the labour market and the housing
\n\t\t\t\t\t\tmarket. There is significant variation in the working and spending behaviour of students from different
\n\t\t\t\t\t\tcountries and in different courses of study. The analysis below mostly draws on data covering the total
\n\t\t\t\t\t\tpool of international students, and so likely masks important compositional differences.<\/p>\n
\t\t\t\t\tThe aggregate impact of international students<\/p>\n
The value of education exports is an indication of the demand that international students add to the
\n\t\t\t\t\t\teconomy. All spending by international students in Australia on tuition fees and all other goods and
\n\t\t\t\t\t\tservices is recorded as an education export in Australia\u0092s Balance of Payments (ABS 2024).<\/p>\n
However, international students also contribute to the economy\u0092s supply potential because many will
\n\t\t\t\t\t\twork while they are in Australia. The Balance of Payments (BOP) provides an estimate of the value of this
\n\t\t\t\t\t\tlabour supply contribution. If an international student is employed in Australia
\n\t\t\t\t\t\twhile studying, payments from their employer are recorded in the primary income account as Compensation
\n\t\t\t\t\t\tof Employees (COE) to non-residents. International students comprised around
\n\t\t\t\t\t\t90\u00a0per\u00a0cent of COE to non-residents in 2023\/2024. Note that this
\n\t\t\t\t\t\testimate of student earnings will not capture funds a student may receive from or send overseas
\n\t\t\t\t\t\t(transactions between non-residents are not captured in the BOP). It will also not include any
\n\t\t\t\t\t\t\u0091cash-in-hand\u0092 earnings. (This could mean student earnings are underestimated in the BOP:
\n\t\t\t\t\t\tCoates, Wiltshire and Reysenbach (2023a) provide survey evidence that temporary migrants are much more
\n\t\t\t\t\t\tlikely to be paid below-minimum wages, meaning cash-in-hand work may be prevalent.)<\/p>\n
The value of education exports has been consistently higher than measured COE to non-residents, suggesting
\n\t\t\t\t\t\tthat in aggregate international students spend more than they earn in Australia (Graph\u00a06). In 2023\/24, education exports were worth $50\u00a0billion \u2013 more than three
\n\t\t\t\t\t\ttimes higher than the estimated $13.4\u00a0billion of COE earned by international students.<\/p>\n
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\n\t\t\t\t\t\t\t
<\/p>\n
Graph 6<\/p>\n
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t![\"A](\"https:\/\/www.rba.gov.au\/publications\/bulletin\/2025\/jul\/images\/graph-0725-2-06.svg\")
<\/p>\n
\t\t\t\t\tSpending on goods and services<\/p>\n
While living and studying in Australia, international students consume goods and services. Our estimates
\n\t\t\t\t\t\tof the average weekly spend of international students using BOP data suggest that international students
\n\t\t\t\t\t\tspend twice as much as residents (as measured by consumption per capita in the Australian National
\n\t\t\t\t\t\tAccounts: National Income, Expenditure, and Product) (Graph\u00a07). A large proportion of this is due to
\n\t\t\t\t\t\ttuition fees, which account for 40\u00a0per\u00a0cent of international student spending. Excluding fees,
\n\t\t\t\t\t\tinternational students spend roughly the same as residents on average. The BOP figures on international
\n\t\t\t\t\t\tstudents\u0092 average spending on goods and services are based on a survey of visitors who have
\n\t\t\t\t\t\ttravelled to Australia for education purposes by Tourism Research Australia, and course fee spending data
\n\t\t\t\t\t\tfrom the Department of Education, Skills and Employment.<\/p>\n
\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
<\/p>\n
Graph 7<\/p>\n
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t![\"A](\"https:\/\/www.rba.gov.au\/publications\/bulletin\/2025\/jul\/images\/graph-0725-2-07.svg\")
<\/p>\n
Certain industries face relatively more demand from international students.
\n\t\t\t\t\t\tUnsurprisingly, international student spending is more concentrated in the tertiary education sector than
\n\t\t\t\t\t\tthat of other residents, given their higher spending on tuition fees (Graph\u00a08). When we exclude
\n\t\t\t\t\t\ttuition fee spending, international student spending patterns are quite similar to that of residents
\n\t\t\t\t\t\t\u2013 it is broadly based across industries and as such disperses widely through the economy. There
\n\t\t\t\t\t\tare, however, some slight sectoral differences. Accommodation and food, transport, and housing make up a
\n\t\t\t\t\t\tslightly higher share of the gross value added associated with education export spending, while business
\n\t\t\t\t\t\tservices, and retail and wholesale trade, make up a lower share.<\/p>\n
\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
<\/p>\n
Graph 8<\/p>\n
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t![\"A](\"https:\/\/www.rba.gov.au\/publications\/bulletin\/2025\/jul\/images\/graph-0725-2-08.svg\")
<\/p>\n
As mentioned above, international student spending plays a significant role in the tertiary education
\n\t\t\t\t\t\tsector. International student tuition fees make up a material share of revenues for universities, and
\n\t\t\t\t\t\tthis share has risen over time (Norton 2023). For the major universities, this share ranges from
\n\t\t\t\t\t\t15\u00a0per\u00a0cent to over 40\u00a0per\u00a0cent of total revenue (including grants) (Sato,
\n\t\t\t\t\t\tHiggins-Devine and Austin 2024). As such, the fees paid by international students have important
\n\t\t\t\t\t\tspillover benefits to university research, employment and capital expenditure. International students
\n\t\t\t\t\t\thave also come to account for a substantial share of enrolments in the VET sector, with enrolments from
\n\t\t\t\t\t\tthis group having risen sharply over the last 10\u00a0or so years (NCVER 2024; Norton 2024).<\/p>\n
A unique feature of international student spending relates to the savings that international students
\n\t\t\t\t\t\tbring to set up and finance their life in Australia. Currently, international students need to provide
\n\t\t\t\t\t\tproof of nearly A$30,000\u00a0of savings to receive a student visa; up from around A$25,000\u00a0in 2023,
\n\t\t\t\t\t\twhich is higher than the cash savings most Australian residents have in their bank accounts. This could
\n\t\t\t\t\t\tmean there is a temporal dimension in international student consumption, whereby consumption is strong
\n\t\t\t\t\t\tupon arrival in Australia as individuals use these savings to set up their lives (i.e. purchasing
\n\t\t\t\t\t\tfurniture and other goods) but then slows afterwards; this same dynamic may hold for domestic residents
\n\t\t\t\t\t\tmoving out of home to attend university. In periods of strong inflows of students, such as just
\n\t\t\t\t\t\tafter borders reopened after the pandemic, this likely had an important effect on aggregate demand in the
\n\t\t\t\t\t\teconomy.<\/p>\n
\t\t\t\t\tThe labour market<\/p>\n
International students make an important contribution to the labour market. While they only made up around
\n\t\t\t\t\t\t2\u00a0to 3\u00a0per\u00a0cent of the labour force prior to the pandemic, they constitute the second
\n\t\t\t\t\t\tlargest group of temporary visa holders with work rights in Australia after New Zealand citizens, making
\n\t\t\t\t\t\tthem a large source of potential labour supply for the Australian economy (Graph\u00a09). There is also a
\n\t\t\t\t\t\tsizeable cohort of individuals on temporary graduate visas, which allow international students to live
\n\t\t\t\t\t\tand work in Australia for between one and five years after they have finished their studies.<\/p>\n
\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
<\/p>\n
Graph 9<\/p>\n
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t![\"A](\"https:\/\/www.rba.gov.au\/publications\/bulletin\/2025\/jul\/images\/graph-0725-2-09.svg\")
<\/p>\n
Prior to the pandemic, the average international student appeared to contribute less to labour supply than
\n\t\t\t\t\t\tan average member of the working age population and an average member of the entire resident population
\n\t\t\t\t\t\t(i.e. including those aged 15\u00a0years and under and those aged over 64\u00a0years). International
\n\t\t\t\t\t\tstudents had lower labour force participation rates than working age residents and were limited to
\n\t\t\t\t\t\tworking 40\u00a0hours per fortnight. Using experimental estimates derived from the ABS Longitudinal
\n\t\t\t\t\t\tLabour Force Survey (LLFS), we estimate that the average international student worked around half of the
\n\t\t\t\t\t\tweekly hours of an average member of the working age population prior to the pandemic, and around
\n\t\t\t\t\t\ttwo-thirds of the hours of an average member of the total resident population (Table\u00a01).<\/p>\n
In the years immediately following the pandemic, the contribution of international students to labour
\n\t\t\t\t\t\tsupply has risen, reflecting both a rise in their participation rates and a lift in the limit on how many
\n\t\t\t\t\t\thours they can work (from 40\u00a0hours to 48\u00a0hours per fortnight). In 2024, we estimate that the
\n\t\t\t\t\t\taverage international student worked around three-quarters of the hours of an average member of the
\n\t\t\t\t\t\tworking age population, and around the same hours as an average member of the total resident population.
\n\t\t\t\t\t\tNote that these are likely upper bound estimates since we assume all international students who
\n\t\t\t\t\t\tparticipate in the labour force work up to the legal limit. Although these estimates apply to the entire
\n\t\t\t\t\t\tstudent population, the propensity of international students to work varies by country of origin, with
\n\t\t\t\t\t\tstudents from India and Nepal typically having higher rates of labour force participation (Grozinger and
\n\t\t\t\t\t\tParsons 2020; Norton 2023) and those from China having lower rates of participation.<\/p>\n
\t\t\t\t\t\t
\n\t\t\t\t\t\t\tTable\u00a01: Labour Force Participation and Average Hours Per Capita(a)
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\u00a0
\n\t\t\t\t\t\t\t\t\tPre-pandemic
\n\t\t\t\t\t\t\t\t\t2024
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\u00a0
\n\t\t\t\t\t\t\t\t\tInternational students
(2015-2019 average, LLFS estimate)
\n\t\t\t\t\t\t\t\t\tInternational students
(2016 Census estimate)
\n\t\t\t\t\t\t\t\t\tWorking age population
\n\t\t\t\t\t\t\t\t\tEntire resident population
\n\t\t\t\t\t\t\t\t\tInternational students (LLFS estimate)
\n\t\t\t\t\t\t\t\t\tWorking age population
\n\t\t\t\t\t\t\t\t\tEntire
Resident population
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\tParticipation rate (%)
\n\t\t\t\t\t\t\t\t\t44
\n\t\t\t\t\t\t\t\t\t51
\n\t\t\t\t\t\t\t\t\t65
\n\t\t\t\t\t\t\t\t\t53
\n\t\t\t\t\t\t\t\t\t61
\n\t\t\t\t\t\t\t\t\t67
\n\t\t\t\t\t\t\t\t\t55
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\tAverage weekly hours per capita
\n\t\t\t\t\t\t\t\t\t9
\n\t\t\t\t\t\t\t\t\t10
\n\t\t\t\t\t\t\t\t\t20
\n\t\t\t\t\t\t\t\t\t16
\n\t\t\t\t\t\t\t\t\t15
\n\t\t\t\t\t\t\t\t\t20
\n\t\t\t\t\t\t\t\t\t16
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t
<\/p>\n
(a) Average hours per capita is calculated as total hours worked divided by either the
\n\t\t\t\t\t\t\t\t\t\t\tinternational student population, the working age population, or the estimated
\n\t\t\t\t\t\t\t\t\t\t\tresident population. Total hours worked for international students is estimated by
\n\t\t\t\t\t\t\t\t\t\t\tassuming all international students in the country work up to the legal limit of
\n\t\t\t\t\t\t\t\t\t\t\t40\u00a0hours per fortnight (pre-pandemic) and 48\u00a0hours per fortnight in 2024,
\n\t\t\t\t\t\t\t\t\t\t\tand then multiplying this by their participation rate.<\/p>\n
<\/p>\n
Sources: ABS; RBA.<\/p>\n
\n\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
<\/p>\n
Looking forward, while rules around the number of hours that international students can work are higher
\n\t\t\t\t\t\tthan pre-pandemic, average participation may decline from the levels seen in 2024. This is because the
\n\t\t\t\t\t\trecent tightening in visa policy has targeted groups of students who were more likely to be seeking to
\n\t\t\t\t\t\twork; that is, those international students who do receive visas going forward are less likely
\n\t\t\t\t\t\tto be focused on employment opportunities in Australia on average (Norton 2024).<\/p>\n
International students nevertheless make a notable contribution to labour supply in certain sectors. A
\n\t\t\t\t\t\tgreater share of international students work in accommodation and food, as well as retail, compared with
\n\t\t\t\t\t\tthe share of the total labour force (Table\u00a02). Further, an increasing share of students are now
\n\t\t\t\t\t\tworking in health care, consistent with strong labour demand in this sector. This contribution was
\n\t\t\t\t\t\timportant in helping businesses in these sectors facing labour shortages in the tight labour market that
\n\t\t\t\t\t\temerged post-pandemic.<\/p>\n
\t\t\t\t\t\t
\n\t\t\t\t\t\t\tTable\u00a02: Sectoral Composition of Employment \u2013 International Students vs Labour
\n\t\t\t\t\t\t\t\tForce(a)
<\/p>\n
Per\u00a0cent<\/p>\n
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t\u00a0
\n\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\tRetail
\n\t\t\t\t\t\t\t\t\tAccommodation and food
\n\t\t\t\t\t\t\t\t\tTransport
\n\t\t\t\t\t\t\t\t\tAdministrative
\n\t\t\t\t\t\t\t\t\tEducation
\n\t\t\t\t\t\t\t\t\tHealth care
\n\t\t\t\t\t\t\t\t\tOther
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t2016\u20132019
\n\t\t\t\t\t\t\t\t\tInternational students
\n\t\t\t\t\t\t\t\t\t13.1
\n\t\t\t\t\t\t\t\t\t37.4
\n\t\t\t\t\t\t\t\t\t5.7
\n\t\t\t\t\t\t\t\t\t8.4
\n\t\t\t\t\t\t\t\t\t6.9
\n\t\t\t\t\t\t\t\t\t11.5
\n\t\t\t\t\t\t\t\t\t18.4
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\tTotal labour force
\n\t\t\t\t\t\t\t\t\t10.2
\n\t\t\t\t\t\t\t\t\t7.0
\n\t\t\t\t\t\t\t\t\t5.1
\n\t\t\t\t\t\t\t\t\t3.4
\n\t\t\t\t\t\t\t\t\t8.1
\n\t\t\t\t\t\t\t\t\t13.2
\n\t\t\t\t\t\t\t\t\t52.9
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t2023
\n\t\t\t\t\t\t\t\t\tInternational students
\n\t\t\t\t\t\t\t\t\t13.7
\n\t\t\t\t\t\t\t\t\t23.4
\n\t\t\t\t\t\t\t\t\t8.7
\n\t\t\t\t\t\t\t\t\t6.7
\n\t\t\t\t\t\t\t\t\t5.6
\n\t\t\t\t\t\t\t\t\t17.0
\n\t\t\t\t\t\t\t\t\t24.8
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\tTotal labour force
\n\t\t\t\t\t\t\t\t\t9.5
\n\t\t\t\t\t\t\t\t\t6.6
\n\t\t\t\t\t\t\t\t\t5.1
\n\t\t\t\t\t\t\t\t\t2.9
\n\t\t\t\t\t\t\t\t\t8.3
\n\t\t\t\t\t\t\t\t\t15.4
\n\t\t\t\t\t\t\t\t\t52.2
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t\t
<\/p>\n
(a) This table shows experimental LLFS estimates of the sectoral composition of
\n\t\t\t\t\t\t\t\t\t\t\tinternational student (and labour force) employment; note that the ABS recommends
\n\t\t\t\t\t\t\t\t\t\t\tthat the Labour Account should typically be used for analysis of employment and jobs
\n\t\t\t\t\t\t\t\t\t\t\tby industry division.<\/p>\n
<\/p>\n
Sources: ABS; RBA.<\/p>\n
\n\t\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t\t
\n\t\t\t\t\t\t\t
<\/p>\n
Many international students will also add to labour supply beyond their \u0091direct\u0092 contributions
\n\t\t\t\t\t\tduring their studies. Over time, many international students transition to temporary graduate visas or
\n\t\t\t\t\t\tpermanent residency. About 30\u00a0per\u00a0cent of international students went on to apply for temporary
\n\t\t\t\t\t\tgraduate visas in the five years to 2022, with this share having risen over time, and international
\n\t\t\t\t\t\tstudents making up around one-third of Australia\u0092s permanent resident intake (Department of
\n\t\t\t\t\t\tEducation 2022).
\n\t\t\t\t\t\tCoates, Wiltshire and Reysenbach (2023b) discuss the longer term benefits of having the
\n\t\t\t\t\t\t\u0091best students\u0092 stay permanently in Australia, including in terms of taxes paid over their
\n\t\t\t\t\t\tlifetimes and spillovers to innovation and productivity growth (the authors note, however, that many
\n\t\t\t\t\t\tinternational students may remain in \u0091visa limbo\u0092 on temporary graduate visas, working in
\n\t\t\t\t\t\tlow-skilled jobs and earning lower incomes than domestic students).<\/p>\n
\t\t\t\t\tThe housing market<\/p>\n
An important area in which international students contribute to demand and, potentially over time, supply
\n\t\t\t\t\t\tis in the housing market.<\/p>\n
International students are more likely to rent than Australian residents. About 50\u00a0per\u00a0cent of
\n\t\t\t\t\t\tover 70,000\u00a0international students surveyed in the 2023 Student Experience Survey reported that they
\n\t\t\t\t\t\trent in the private rental market (either in a private rented house, flat or room) (QILT 2023); by
\n\t\t\t\t\t\tcontrast, around one-third of the rest of the population are renters (Agarwal, Gao and Garner 2023). In
\n\t\t\t\t\t\tthe Student Experience Survey, around 24\u00a0per\u00a0cent of international students reported living
\n\t\t\t\t\t\twith family or friends, 15\u00a0per\u00a0cent in student accommodation, 3\u00a0per\u00a0cent in a
\n\t\t\t\t\t\thomestay and 2\u00a0per\u00a0cent in \u0091other\u0092 accommodation. Housing demand from international
\n\t\t\t\t\t\tstudents also tends to be geographically concentrated around areas where educational institutions are
\n\t\t\t\t\t\tbased, notably inner-city locations. According to the 2016 Census, international students were twice as
\n\t\t\t\t\t\tlikely to live in inner-city areas than domestic students (Evans, Rosewall and Wong 2020).<\/p>\n
Housing market outcomes are determined by the interaction of housing supply and demand. In theory, in the
\n\t\t\t\t\t\tface of a relatively fixed supply of housing in the short term, we would expect an increase in
\n\t\t\t\t\t\tinternational students to put upward pressure on rental demand and rents (all else equal), in the same
\n\t\t\t\t\t\tway that any kind of increase in the renting population would impact demand.<\/p>\n
As a back-of-the-envelope exercise, if we assume that 50\u00a0per\u00a0cent of international students
\n\t\t\t\t\t\trent, an additional 100,000\u00a0students would increase private rental demand by
\n\t\t\t\t\t\t50,000\u00a0individuals. Models of the housing market used by the RBA suggest that a 50,000\u00a0increase
\n\t\t\t\t\t\tin population would raise private rents by around 0.5\u00a0per\u00a0cent compared with a baseline
\n\t\t\t\t\t\tprojection. The marginal effect of an additional renter may be greater in periods where the rental market
\n\t\t\t\t\t\tis tight and vacancy rates are low, such as occurred post-pandemic. Nonetheless, the rise in
\n\t\t\t\t\t\tinternational student numbers is likely to have accounted for only a small share of the rise in rents
\n\t\t\t\t\t\tsince the onset of the pandemic, with much of the rise in advertised rents occurring before borders were
\n\t\t\t\t\t\treopened.<\/p>\n
With time, higher demand for housing due to a greater number of international students in Australia could
\n\t\t\t\t\t\tspur more dwelling investment, in the way it would for an expansion of the population more broadly.
\n\t\t\t\t\t\tHowever, capacity constraints, high costs in the construction sector and low levels of building approvals
\n\t\t\t\t\t\trelative to the population may mean the housing supply response could be slower to materialise compared
\n\t\t\t\t\t\twith in the past (Hunter 2024). One area where higher international student numbers have generated a
\n\t\t\t\t\t\tsupply response has been in purpose-built student accommodation, with rapid growth in building approvals
\n\t\t\t\t\t\tfor such projects in recent years (ABS 2025). Industry projections are for continued rapid growth in this
\n\t\t\t\t\t\tarea in the years ahead (CBRE 2024).<\/p>\n
\t\t\t\t\tAssessment and conclusion<\/p>\n
Australia\u0092s BOP suggests that, overall, international students spend more than they earn. In
\n\t\t\t\t\t\tline with this aggregate finding from the BOP, analysis of how international students interact with and
\n\t\t\t\t\t\tcontribute to key sectors in the economy suggest that international students likely contribute more to
\n\t\t\t\t\t\tdemand than they do to supply, although this gap appears to have narrowed following the pandemic. In the
\n\t\t\t\t\t\tmarket for goods and services, the \u0091average\u0092 international student spends more than other
\n\t\t\t\t\t\tAustralians, driven by high average spend on tuition fees. On the other hand, lower average hours worked
\n\t\t\t\t\t\tand labour force participation rates mean that, at least prior to the pandemic, their labour supply
\n\t\t\t\t\t\tcontribution was less than that of an average member of the working age population and the average
\n\t\t\t\t\t\tAustralian resident. In the housing market, supply is constrained in the near term, so changes in the
\n\t\t\t\t\t\tnumber of international students in Australia could impact market outcomes, in the same way changes in
\n\t\t\t\t\t\tthe population more broadly could.<\/p>\n
If and how the short-term demand-supply imbalance of international students affects macroeconomic outcomes
\n\t\t\t\t\t\twill depend on several factors. This could include the degree of spare capacity in the economy and labour
\n\t\t\t\t\t\tmarket, the pace of change in student numbers (in addition to the overall level) and developments in the
\n\t\t\t\t\t\teconomy\u0092s supply side. For example, rapid growth in the international student stock post-pandemic
\n\t\t\t\t\t\tlikely contributed to some of the upward pressure on inflation from 2022 to early 2023, especially as
\n\t\t\t\t\t\tarriving students frontloaded their spending as they set up in Australia and took time to join the labour
\n\t\t\t\t\t\tmarket. However, the increase in international students was just one of many other forces at play in this
\n\t\t\t\t\t\ttime that drove demand above supply in the economy, and hence higher inflation. For instance, supply-side
\n\t\t\t\t\t\tfactors were the biggest driver of the increase in inflation in 2022 and 2023 (RBA 2023; Beckers, Hambur
\n\t\t\t\t\t\tand Williams 2023) while strong domestic demand arising from supportive fiscal and monetary policy also
\n\t\t\t\t\t\tplayed an important role.<\/p>\n
\t\t\t\t\t
\n\t\t\t\t\t\t
<\/p>\n
\t\t\t\t\t <\/p>\n
\t\t\t\t\t\t\tReferences<\/p>\n
Australian Bureau of Statistics (ABS) (2024), \u0091Recording of International Students in the
\n\t\t\t\t\t\t\t\tBalance of Payments\u0092, September.<\/p>\n
ABS (2025), \u0091Student Accommodation in Australia \u2013 Estimates of Student Accommodation
\n\t\t\t\t\t\t\t\tApprovals in Australia\u0092, Report No 2021\/22\u20132023\/24.<\/p>\n
Agarwal N, Gao R and Garner M (2023), Renters,
Grozinger P and S Parsons (2020), \u0091The
Bank of Canada (2024), \u0091How Newcomers Impact the Canadian Economy,\u0092 Monetary Policy
Beckers B, J Hambur and T Williams (2023), \u0091Estimating
CBRE (2024), \u0091Australian Student Accommodation 2024 Edition\u0092, Intelligent Investment
Champagne J et al (2023), \u0091Assessing the Effects of Higher Immigration on the
Coates B, T Wiltshire and T Reysenbach (2023a), \u0091Short-changed: How to Stop the Exploitation
Coates B, T Wiltshire and T Reysenbach (2023b), \u0091Graduates in Limbo \u2013 International
Department of Education (2022), \u0091Post-study Work Rights Report\u0092, Australian Government,
Department of Education (2024), \u0091End of the Two-year Extension of Post-study Work
Evans R, T Rosewell and A Wong (2020), \u0091The Rental Market
Hunter S (2024), \u0091Housing Market Cycles and
Hurley P (2020), \u0091International Students Vital to Coronavirus Recovery\u0092, Mitchell
NCVER (National Centre for Vocational Education Research) (2024), \u0091Total VET Students and
Norton A (2023), \u0091Mapping Australian Higher Education 2023\u0092, ANU Centre for Social
Norton A (2024), \u0091International Students: A Government Changes its Mind\u0092, ANU Migration
QILT (Quality Indicators for Learning and Teaching) (2023), \u0091Student Experience Survey\u0092.
\n\t\t\t\t\t\t\t<\/p>\n RBA (Reserve Bank of Australia) (2023), \u0091Box\u00a0C:
Sato K, K Higgins-Devine and S Austin (2024), \u0091Group of Eight Universities Warn They Are
\t\t\t\t\t\t
<\/p>\n
\n\t\t\t\t\t\t\t\t\tRent Inflation and Renter Stress<\/a>, RBA Bulletin, March.<\/p>\n
\n\t\t\t\t\t\t\t\t\tCOVID-19 Outbreak and Australia\u0092s Education and Tourism
\n\t\t\t\t\t\t\t\t\tExports<\/a>\u0092, RBA Bulletin, December.<\/p>\n
\n\t\t\t\t\t\t\t\t\tReport \u2013 In Focus, July.<\/p>\n
\n\t\t\t\t\t\t\t\t\tthe Relative Contributions of Supply and Demand Drivers to Inflation in Australia<\/a>\u0092,
\n\t\t\t\t\t\t\t\tRBA Bulletin, June.<\/p>\n
\n\t\t\t\t\t\t\t\tReport, July.<\/p>\n
\n\t\t\t\t\t\t\t\tCanadian Economy and Inflation\u0092, Bank of Canada Staff Analytical Note No 2023-17.<\/p>\n
\n\t\t\t\t\t\t\t\tof Migrant Workers in Australia\u0092, Grattan Institute Report No 2023-07, May.<\/p>\n
\n\t\t\t\t\t\t\t\tStudent Visa Pathways After Graduation\u0092, Grattan Institute Report No 2023-09, October.<\/p>\n
\n\t\t\t\t\t\t\t\tOctober.<\/p>\n
\n\t\t\t\t\t\t\t\tRights\u0092, Australian Government.<\/p>\n
\n\t\t\t\t\t\t\t\t\tand COVID-19<\/a>\u0092, RBA Bulletin, September.<\/p>\n
\n\t\t\t\t\t\t\t\t\tFundamentals<\/a>\u0092, Speech at the REIA Centennial Congress, Hobart, 16\u00a0May.<\/p>\n
\n\t\t\t\t\t\t\t\tInstitute and Victoria University Issues Paper.<\/p>\n
\n\t\t\t\t\t\t\t\tCourses 2023\u0092, Statistical Report No 2206-5156.<\/p>\n
\n\t\t\t\t\t\t\t\tResearch and Methods.<\/p>\n
\n\t\t\t\t\t\t\t\tHub Insights Paper No 24\/3.<\/p>\n
\n\t\t\t\t\t\t\t\t\tSupply and Demand Drivers of Inflation in Australia<\/a>\u0092, Statement on Monetary
\n\t\t\t\t\t\t\t\t\tPolicy, February.<\/p>\n
\n\t\t\t\t\t\t\t\tReliant on International Student Fees as Government Looks to Cap Enrolments\u0092, ABC
\n\t\t\t\t\t\t\t\t\tNews, 16\u00a0May.<\/p>\n
\n\t\t\t\t\t\tUnderlying data for selected graphs<\/a>.
\n\t\t\t\t\t\tOther data may be available upon request via our
\n\t\t\t\t\t\tgeneral enquiry page<\/a>.
\n\t\t\t\t\t<\/p>\n","protected":false},"excerpt":{"rendered":"
24 July 2025
Madeleine McCowage, Harry Stinson and Matthew Fink
COVID-19, education, housing, inflation, international,…\n","protected":false},"author":2,"featured_media":18514,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-18513","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/18513","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=18513"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/18513\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/18514"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=18513"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=18513"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=18513"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}