Where were you at 4:23pm on the 19th of March 2020?
Sam, Tony and I were at the Adelaide Hilton, setting up the room for what we now know was our only live event in Adelaide for 2020.
COVID-19 was bubbling away and only just started making headlines around the world, but even then I don’t think we comprehended it, nor fully anticipated what was about to happen.
At this very moment, Scomo addressed the nation and announced that as of 9 pm the following night, our international borders would be closed to the rest of the world.
I remember it was only at that point that I realised it was getting real. Naive as it was, this was the moment I accepted COVID-19 was here, COVID-19 was serious, and COVID-19 was going to impact all of us in some way.
Whilst we understand the government’s decision to close international borders was (at the time) instrumental to containing the virus, never in our minds did we think this decision would still be in place 20 months after the fact, nor did we recognise the momentous impact this decision alone would have on us socially and economically.
According to the Australian Bureau of Statistics and similar to years prior, in 2019, Australia welcomed approximately 10 million short and long-term visitors (which included international students). That’s roughly 27,000 visitors per day and according to the Reserve Bank, they spent almost $65 million on our goods and services.
In 2020, this number plummeted to 2 million visitors. That is, before our borders were snapped shut.
I know I’ve mentioned this time and time again in previous articles, but the non-existence of international students in our rental market has been one of, if not the most significant reasons for our increased vacancies and lower rents since the pandemic, and I’ll tell you why…
The international students market is worth around $40 billion to the Australian economy. $17 billion is spent on tuition fees and the balance ($23 billion) for living expenses (including rent). That’s approximately $109 million per day.
In 2019, Australia schooled 440,667 international students. Whilst it’s difficult to get actual numbers on how many of these students live on and off-campus, it’s estimated that more than 76% of these students contributed to our tenant pool.
It’s no secret that Melbourne has been the hardest hit rental market since the pandemic and it’s clear when you know that in some Melbourne suburbs, 30% of tenants are international students. The gaping hole left by the international student market has contributed to rents that have fallen as much as 20% and vacancy rates have reached up to 10%.
Am I worried? No way.
Yesterday, on November 1, our international borders reopened, albeit only to Australian citizens and residents. But this is a significant step closer to endorsing a plan to re-welcoming our international students. The travel re-boot will inevitably push things along and according to some experts, they anticipate that international students will begin to return in Q2 2022, with some assumptions that the return rate will initially reach 75%.
Here in hardest hit Melbourne, the Victorian Government has been working on The International Students Arrival Plan. This plan was recently approved by the Australian Government and is a two-stage plan.
Stage one – will allow a limited amount of places to arrive each week. These places will be prioritised for students that need to complete practical work on campus. For example medical, health and post-grad research students.
Stage two – will expand to include all other enrolled students. These will include TAFE’s, English-language colleges and private education providers.
Currently, there is no specified timeframe of when these plans are due to kick-off. I’m going to be a optimistic… I think international students will start to return sometime in 2022 and when they do return, the rental market will explode! I’ll continue to monitor things closely and keep you across all things Property Management as always.