Sydney: Australia said on Tuesday it would limit the enrolment 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-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% more international students in our universities today than before the pandemic, and about 50% more in our private vocational and training providers," Education Minister Jason Clare told a press conference.

New international student enrolments 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 on their specific enrolment caps.

The University of Melbourne said in a statement that it had received its indicative cap, without elaborating, 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 A$36.4 billion ($24.7 billion) to the economy in the 2022-2023 financial year.

Moody's Ratings sees 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 enrolments over time," said John Manning, Vice President and Senior Credit Officer, Moody's Ratings.

Polls have showed voters are concerned 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% to a record 548,800, mostly driven by students from India, China and 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 last month more than doubled the visa fee for foreign students and pledged to close loopholes in rules that allowed them to continuously extend their stay.