SYDNEY – Australia’s student housing sector is experiencing record demand as the number of interstate and international students increase, but slow planning processes and delivery pipelines are forcing many students into the private rental market and adding further stress to Australia’s housing shortage, according to Cushman & Wakefield’s recent Campus Quarter 2025 report.
The global real estate firm’s report shows that most Purpose-Built Student Accommodation (PBSA) assets are operating at 95–100% occupancy, with double-digit rent growth since 2022, yet structural undersupply persists. Australia hosts more than 550,000 international higher education students, but has only 3.6 international students per PBSA bed — a fraction of the supply available in more mature markets like the UK.
“Australia’s student housing market has reached a critical juncture,” said Conal Newland, International Director and Head of Living, APAC at Cushman & Wakefield. “We have the demand profile of a mature market, but the planning and policy settings of an emerging one. Without reform, Australia will struggle to deliver the PBSA capacity needed to support both its education sector and its housing market.”
Federal Planning Reform: A National Priority
Newland said the federal government should recognise PBSA as a distinct planning use class to streamline approvals and attract greater private sector investment.
“We’re calling on the federal government to recognise PBSA as a defined use class under the planning system and to work with states and territories to create a consistent national framework,” said Newland. “This should include national priority development zones around major universities, where PBSA developments can bypass certain local overlays — mirroring the success of Build-to-Rent (BTR) acceleration models already used in New South Wales and Victoria. We also need standardised DA requirements across jurisdictions to help match development timelines with the strong investor appetite that exists for this sector.”
Newland said PBSA must be treated as essential housing infrastructure, not a niche product, given its ability to ease rental pressures, support education exports, and attract international talent. It should be able to contribute to National Housing Accord delivery targets.
“PBSA relieves pressure on the wider rental market by redirecting students out of general housing stock. It’s a win for students, renters, and investors alike — but the policy needs to evolve to realise the potential,” he added.
Structural Undersupply Meets Surging Demand
Cushman & Wakefield’s Campus Quarter 2025 report found that more than 10,000 PBSA beds are under construction nationally, but another 10,000+ beds remain in the planning or feasibility stage, with many projects stalled by high construction costs, zoning complexity, and financing constraints.
“Investor appetite for Australia’s PBSA sector is clear, and student demand is strong — the challenge now is delivery,” said Josh Rose-Nokes, Director of Living Research, APAC and author of the report. “Streamlined planning and national coordination would allow PBSA to scale faster, providing housing where it’s needed most and supporting both the education and rental markets.”
PBSA: A Key Part of the Housing Solution
The report highlights that PBSA can also help alleviate Australia’s rental housing crisis by reducing competition in the private rental market. With national vacancy rates near historic lows, dedicated student accommodation provides an essential release valve for demand, particularly in inner-city precincts.
PBSA offers all-inclusive living options that are typically priced more affordably than purchasing the same services on the open market, and that reduce strain on general rental housing, while providing students with purpose-built, well-managed, and sustainable accommodation.
Investor Confidence Rebounding
Investor appetite for PBSA is strengthening, with global capital targeting the sector for its income resilience and ESG alignment. Recent large-scale transactions — including portfolio acquisitions and forward-funding deals — highlight long-term confidence in Australia’s student housing fundamentals.
“Capital is ready and waiting,” added Newland. “What’s needed now is a consistent national planning framework that gives investors and developers the certainty to deliver at scale. PBSA should be part of the federal government’s housing supply strategy — it’s one of the most shovel-ready solutions available.”
About the Report
Cushman & Wakefield’s Campus Quarter 2025 analyses Australia’s PBSA market performance, pipeline, and investment trends. It highlights key challenges including planning complexity, financing constraints, and delivery risks, underscoring the sector’s strong fundamentals and potential to support Australia’s housing and education goals.
