SYDNEY – Australia’s student housing sector is undergoing a notable transformation, characterized by record demand fueled by a surge in interstate and international students. However, slow planning processes and inadequate delivery pipelines are driving many students into the competitive private rental market, adding further strain to Australia’s ongoing housing shortage. This situation is detailed in Cushman & Wakefield’s recent Campus Quarter 2025 report.
The report from the global real estate firm emphasizes that most Purpose-Built Student Accommodation (PBSA) assets are operating at an impressive 95–100% occupancy, accompanied by double-digit rent growth since 2022. Despite this burgeoning demand, a structural undersupply remains. Australia currently hosts over 550,000 international higher education students, yet there are only 3.6 international students per PBSA bed, a stark contrast to more mature markets such as 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 emphasizes the importance of the federal government recognizing PBSA as a distinct planning use class. This recognition could streamline approvals and encourage greater private investment in the sector.
“We’re calling on the federal government to acknowledge PBSA as a defined use class within the planning system and to collaborate with states and territories to establish a consistent national framework,” said Newland. “This could involve creating national priority development zones around major universities, allowing PBSA developments to bypass certain local overlays. This approach would mirror the success seen with Build-to-Rent (BTR) acceleration models currently employed in New South Wales and Victoria. Standardizing development application requirements across jurisdictions would also help align development timelines with the strong investor interest evident in this sector.”
Newland argues that PBSA should be classified as essential housing infrastructure, rather than a niche product. Its potential to ease rental pressures, bolster education exports, and attract international talent must be fully recognized. PBSA could significantly contribute to National Housing Accord delivery targets.
“PBSA alleviates pressure on the broader rental market by directing students away from general housing stock. This benefits students, renters, and investors alike — but policy reforms are necessary to realize this potential,” he adds.
Structural Undersupply Meets Surging Demand
Cushman & Wakefield’s Campus Quarter 2025 report outlines that over 10,000 PBSA beds are currently under construction throughout Australia. However, an additional 10,000+ beds remain caught in the planning or feasibility stages, with numerous projects hindered by high construction costs, zoning complexities, and financing challenges.
“Investor interest in Australia’s PBSA sector is evident, and student demand remains robust — the challenge lies in the delivery,” said Josh Rose-Nokes, Director of Living Research, APAC and the report’s author. “Streamlined planning and national coordination could enable PBSA to scale more rapidly, delivering housing where it is most needed and supporting both the education and rental markets.”
PBSA: A Key Part of the Housing Solution
The report indicates that PBSA can also play a critical role in alleviating Australia’s rental housing crisis by decreasing competition in the private rental market. With national vacancy rates near historic lows, dedicated student accommodation serves as an essential release valve for demand, particularly in urban centers.
PBSA often offers all-inclusive living options that are typically more financially accessible than acquiring equivalent services in the competitive open market. This arrangement not only mitigates strain on general rental housing but also provides students with purpose-built, well-managed, and sustainable accommodation.
Investor Confidence Rebounding
There is a noticeable resurgence in investor interest in PBSA, with global capital increasingly targeting the sector due to its income resilience and alignment with environmental, social, and governance (ESG) criteria. Recent substantial transactions, including portfolio acquisitions and forward-funding agreements, underscore the long-term confidence in the fundamentals of Australia’s student housing sector.
“Capital is prepared and waiting,” noted Newland. “What we need now is a cohesive national planning framework that provides investors and developers with the certainty needed to deliver at scale. PBSA should be integral to the federal government’s housing supply strategy — it represents one of the most shovel-ready solutions available.”
About the Report
Cushman & Wakefield’s Campus Quarter 2025 report investigates the performance, pipeline, and investment trends within Australia’s PBSA market. It highlights significant challenges such as planning complexity, financing constraints, and delivery risks while reiterating the sector’s strong fundamentals and its potential to support Australia’s housing and education aspirations.