The RBA has warned that extended international travel rules could force down house prices as rental vacancy rates increase in Sydney and Melbourne.
In its Financial Stability Review, the central bank claims that without a large amount of international students coming into Sydney and Melbourne, vacancy rates of short-term rental properties are growing.
A recent analysis by education think tank the Mitchell Institute found that international students were in more than 30 per cent of the accommodation in some inner-city and close-to-campus suburbs.
“There is also less demand from international tourists and domestic business travellers for short-term rental properties,” the Reserve Bank of Australia’s (RBA) economists wrote in the review.
“Extended periods of vacancies could lead to mortgaged investors struggling to afford repayments and deciding to sell their properties.
“This has the potential to exacerbate housing price falls, particularly in areas with more investor properties.
“A sizeable portion of small-to-medium-sized business loans are also secured by residential property, and so difficulties experienced by these businesses could also lead to more forced sales and downward pressure on housing prices.”
The Department of Home Affairs said that due to exceptional circumstances during the COVID-19 pandemic and the need to ensure the supply of critical services, the Department of Home Affairs and Australian Border Force will take a flexible approach to student visa holders working beyond their usual work limitations, but only in specified industries.