International Students Are Not the Culprit of Inflation: RBA Sets the Record Straight

In July 2025, the Reserve Bank of Australia (RBA) released its Quarterly Bulletin, including a detailed analysis on the relationship between international students and the Australian economy. The report directly addresses growing public concerns blaming rising rents and inflation on international students — and firmly refutes them.

Key Finding: International Students Contribute — But Are Not to Blame

While student numbers surged post-pandemic, the RBA made it clear:

“The rapid increase in international student numbers contributed somewhat to consumption and short-term inflation, but was not a major driver.”

Modelling suggests that even an additional 100,000 international students would only push up rents by about 0.5%. In fact, most of the increase in advertised rents occurred before Australia reopened its borders, indicating other factors were at play.

International Students: Migration Drivers and Economic Boosters

• Between 2022 and 2023, international students accounted for 50% of Australia’s net overseas migration.
• Education is now Australia’s fourth-largest export, worth an estimated $50 billion in 2023–24.
• International students have strong spending power — on average, they spend twice as much per week as domestic residents, with 40% of this going toward tuition, and the rest on housing, transport, food, and daily essentials.

Housing Demand: Geographically Concentrated, But Modest Impact

The RBA notes that housing demand from international students is largely concentrated around university precincts (e.g., inner-city suburbs).

• Around 50% of students rent in the private market rather than living in student accommodation or homestays.
• In tight markets, additional demand can cause upward pressure on rents, but the overall effect remains limited.
• The growth in purpose-built student accommodation (PBSA) has also helped to absorb demand and will continue to expand in coming years.

Labour Market: A Flexible and Significant Workforce

• International students are the second-largest group of temporary visa holders with work rights, behind only New Zealand citizens.
• Post-COVID reforms increased the permitted work hours from 40 to 48 hours per fortnight.
• While recent policy tightening may reduce future student work participation, international students continue to fill vital labour gaps, particularly in hospitality, retail, and aged care sectors.

Spending Patterns: Front-Loaded, Not Persistent

The RBA highlights that international student consumption is typically front-loaded:

• Students arrive with nearly $30,000 in savings (per visa requirement) and often spend heavily at the start — on rent, setup costs, transport, and essentials.
• Spending stabilises after this initial period, limiting long-term inflationary impact.

“Compared to similar population growth, international students are more likely to drive medium-term, supply-responsive growth rather than sustained demand shocks.”

Takeaways for Students and Families Planning to Study in Australia

At Riverwood Migration, we see three key insights from this report:

• Don’t Let Misleading Narratives Derail Your Plans

International education remains a strategic priority in Australia. Stay focused on your long-term goals.

• Plan Housing and Employment Strategically

Smart campus and city selection can maximise your visa duration and post-study benefits.

If you have any questions or would like professional assistance, please feel free to contact us at Riverwood Migration (Email: [email protected]). We are committed to providing transparent, expert migration services to help you achieve your dream of moving to Australia.