Australia Faces Potential Shortfall of 185,000 Student Accommodation Beds :: Hospitality Trends

Demand Exceeds Available Purpose-Built Housing

Australia’s purpose-built student accommodation sector has a gap between potential demand and available rooms, according to CBRE Research’s mid-2026 market report.

The firm estimates around 185,000 additional rooms could be needed nationally based on the number of student renters and existing purpose-built student accommodation stock, assuming suitable accommodation was available. Purpose-built student accommodation currently provides one bed for every 15 university students.

The current penetration rate is about 7%, compared with some overseas study destinations where purpose-built student accommodation provides one bed for every two or three students.

The largest estimated shortages are in major inner-city university precincts. Melbourne City and Inner North Melbourne have potential unmet demand for approximately 10,000 beds. Central and Inner-west Sydney have an estimated shortfall of about 25,000 beds.

Pipeline Could Add 34,000 Beds by 2029

Projects planned between 2026 and 2029 could add approximately 34,000 purpose-built student accommodation beds across Australia. If every project proceeds, this would represent an increase of around one-third on existing stock.

The additional capacity would lift purpose-built student accommodation penetration to about 9% of the university student population.

Melbourne accounts for the largest proportion of planned new beds, with 28% of national supply in the pipeline. Perth represents 22% of proposed supply, and Sydney accounts for 20%.

The five largest operators account for about 70% of total industry capacity. UniLodge has 33,000 beds across 118 facilities, while Scape operates more than 20,000 beds in 41 buildings.

International Students Remain a Major Source of Demand

Australia had about 750,000 international students in early 2026. Nearly one in three university students is an international student.

Students from China represented 23% of Australia’s international student population, while Indian students accounted for 17%. Enrolments from India, Nepal, Vietnam, Bangladesh and the Philippines have grown over the past decade.

Higher education commencements were broadly flat from 2023 through 2026, and international student intake is forecast to remain broadly steady through 2027. The Australian government has committed to an intake of 295,000 higher education international students for 2027.

Weekly Rents Vary Substantially Between Cities

Purpose-built student accommodation rents differed across Australian capitals as of July 2026. Sydney had the highest weekly rates, ranging from $700 to $900 per student. Melbourne rents generally ranged from $550 to $650 per week, while Brisbane rates typically ranged from $500 to $600.

Canberra, Adelaide and Perth offered accommodation options between $300 and $400 per week, based on an analysis of 101 student accommodation buildings.

Median studio rents in Sydney and Melbourne rose at a compound annual growth rate of 5% between 2018 and 2026. Nearly one-quarter of standard suites in the analyzed group were priced above $700 per week in 2026, compared with 4% in 2023.

Rental growth in 2026 was in the low single digits, with Brisbane recording stronger growth than Sydney and Melbourne.

Purpose-Built Student Accommodation Rents Remain Above Nearby Apartment Rents

Nationally, purpose-built student accommodation rents were 12% higher than rents for two-bedroom apartments in the same precincts, based on a comparison of 106 buildings.

The premium reflects services and facilities commonly included in student accommodation, such as utilities, furnishings, security, study spaces, shared areas and pastoral support.

Investment pricing conditions were broadly stable through 2025 and early 2026. Indicative capitalization rates ranged from 4.75% to 5% in Sydney and 5% to 5.25% in Melbourne. Brisbane rates ranged from 5.25% to 5.75%, while Perth and Adelaide ranged from 6% to 6.5%.

New Zealand Market Records Enrollment Growth

In New Zealand, international student enrollments rose 14% between 2024 and 2025. China accounted for 47% of enrollments, followed by India at 12% and the United States at 6%.

Auckland contains about 40% of New Zealand’s university student population. The country’s largest purpose-built student accommodation facility, a 964-unit property at 22 Stanley St., is under construction and is on track to open at the beginning of 2028.