Affordable homes are becoming increasingly scarce in Australia. The government attributed last year’s sharp rise in immigration as a key factor that is contributing to the crisis. In response, it has implemented measures to restrict the inflow of students whose numbers skyrocketed last year, significantly outpacing the numbers of skilled migrants and other categories.
An Australian government department’s analysis shows that 60% of international students live in apartments, 26% in detached houses, and the remainder in hostels or university housing. These numbers, read along with the unprecedented surge in international students in 2023, shed light on the acute housing crisis, particularly in Sydney and Melbourne, which attract most of these students.
Chart 1 illustrates the Rental Affordability Index in the greater capital areas of Sydney and Melbourne, where a higher index indicates better affordability. Rent affordability has plummeted in both regions, with the decline being much steeper in Sydney than Melbourne. This coincides with the sharp increase in student arrivals.
While the housing crisis, exacerbated by a surge in student numbers, provided a rationale for limiting student intake, a closer look reveals disparities in how these restrictions were applied. Students from certain countries, particularly India, were impacted disproportionately, while students from other countries, notably China, grew in number this year despite the restrictions.
Chart 2 depicts the visa grant rates for students from India, China, and all countries who applied for higher education and vocational education and training courses in Australia. China and India are shown separately because they form the top two shares of international students by a significant margin.
The overall visa grant rate has dropped significantly from more than 90% before the pandemic to below 80% after, in line with the new tightening. The grant rate for Indian students dropped from nearly 90% to 65%. But for Chinese students, it has remained close to 95% even in recent years.
Is this disparity because Indian students are more concentrated in regions with acute housing crises, while Chinese students are not? Chart 3 shows that Chinese students outnumber Indian students in Sydney (New South Wales), where the housing crisis is more severe, whereas Indian students outnumber Chinese students in Melbourne (Victoria), where it is comparatively better.
Chart 3| Number of students from India and China who began courses in New South Wales and Victoria over the years. K=1,000
Victoria:
New South Wales:
If the housing crisis was the primary factor for increased visa denials, Chinese students should have faced more rejections given their higher concentration in Sydney. So, what explains the higher denial rates for Indian students?
The answer might lie in another problem — mounting visa fraud. The Australian government’s Department of Education says there is a higher proportion of “high-risk” student visa applications from India, Nepal, and Pakistan.
Chart 4 shows the visa processing time in days for Chinese and Indian students between April and July this year and last year. The processing time is separately denoted for three types of student visa applications: straightforward (satisfies most necessities), typical, and complex (lacks many requirements).
Although the processing time has increased for Chinese and Indian students, Indian student visas are processed for a much longer time, which is attributed to their classification as “high-risk”. Thus the higher rejection rate for Indian students is better explained by an increase in visa fraud rather than the housing crisis.
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Published – December 26, 2024 10:00 am IST
