Australia said on Tuesday that it would limit the enrollment number of new international students to 270,000 for 2025 as the government looks to rein in record migration that has contributed to a spike in home rental prices.

The decision follows a raft of actions since last year to end COVID-19-era concessions for foreign students and workers in Australia that helped businesses recruit staff locally while strict border controls kept overseas workers out.

"There's about 10 percent more international students in our universities today than before the pandemic, and about 50 percent more in our private vocational and training providers," Education Minister Jason Clare told media at a press conference.

New international student enrollments will be capped at 145,000 for universities, which is around 2023 levels, and 95,000 for practical and skills-based courses.

Clare said the government would inform universities of their specific enrollment caps.

Australian universities have repeatedly warned of the financial consequences these moves could entail on the lucrative tertiary education industry.

The University of Melbourne said in a statement that it had received its indicative cap and was assessing the financial and other implications.

"The cap on international students will have detrimental consequences for our university, the higher education sector generally and the nation for years to come," said its vice-chancellor, Professor Duncan Maskell.

The University of Sydney also said it was studying the likely impact of the cap.

"We'll continue to work collaboratively with governments and the sector on managed growth of international higher education, one of Australia's most valuable exports," it said in a statement.

Universities Australia, the peak body for universities, said the government move would "apply a handbrake" to the sector.

International education, Australia's fourth-biggest export after iron ore, gas and coal, was worth 36.4 billion Australian dollars ($24.7 billion) to the economy in the 2022-2023 financial year.

Moody's Ratings see a modest impact from the proposed cap on Australian universities, adding that it does not constitute a material deterioration in the operating environment for the sector.

"The credit impact on larger universities will be neutral, given any cap on commencements will constrain growth in international enrollments over time," said John Manning, vice president and senior credit officer at Moody's Ratings.

Polls show voter concern about large influxes of foreign students and workers putting excess pressure on the housing market, making immigration one of the potential major battlegrounds in an election less than a year away.

Net immigration hit a record high in the year to September 30, 2023, surging 60 percent to a record 548,800, mostly driven by students from India, China and the Philippines. That was higher than the 518,000 people in the year ending June 2023.

In a bid to contain the surge in migration, the government more than doubled the visa fee for foreign students in July and pledged to close loopholes in rules that allowed them to continuously extend their stay.

While the government justifies these caps as necessary to manage the surge in migration and alleviate pressure on the housing market, opponents argue that this approach unfairly targets a specific group without addressing broader systemic issues, raising concerns about Australia's global competitiveness in attracting international talent​.

"The government needs to take a long-term look at the structural supply issues in our country. We cannot blame international students for a problem we created," Torie Brown, executive director of the Property Council of Australia's Student Accommodation Council, said ahead of Tuesday's announcement.

(With input from Reuters)