Large swings in foreign student numbers have a particularly strong effect on housing costs, such as during the COVID-19 pandemic, the researchers said in a paper published on Thursday.
That's because the market has a limited ability to quickly add new supply to meet rapid increases in demand, due to constraints such as skills shortages and approval delays.
The international student population jumped from 357,919 in 2022 to 608,262 at the end of the 2024 financial year, following a drop in enrolments during the pandemic, according to research from conservative think tank the Institute of Public Affairs.
Rental costs were disproportionately affected because international students are more likely to rent than the general population.
As a "back-of-the-envelope" metric, every 100,000 additional international students in Australia would increase rents by 0.5 per cent compared to the counterfactual, the Reserve Bank of Australia study found.
That means rents grew about 1.25 per cent faster than they otherwise would have if the international student population had not grown by 250,000 from 2022 to 2024.
The effect may have been greater than that, given the especially tight rental market during that period, with the vacancy hitting a record low of 0.7 per cent in February 2024, according to Domain.
But its still a drop in the bucket compared to the overall growth in rents in recent years.
Rents have jumped more than 40 per cent in the past five years to reach a national average of $665 per week, according to property research firm Cotality.
The RBA report found the rise in international students likely only accounted for "a small share of the rise in rents since the onset of the pandemic, with much of the rise in advertised rents occurring before borders were reopened".
"The increase in international students was just one of many other forces at play in this time that drove demand above supply in the economy, and hence higher inflation," the authors said.
"For instance, supply-side factors were the biggest driver of the increase in inflation in 2022 and 2023, while strong domestic demand arising from supportive fiscal and monetary policy also played an important role."
Prospective homebuyers hoping for lower mortgage rates could get a clearer indication of the RBA's next move on Thursday when governor Michele Bullock speaks for the first time since a surprise surge in unemployment data last week.
Ms Bullock will talk about the central bank's dual mandate of maintaining low inflation and unemployment in a speech to the Anika Foundation in Sydney.
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