A one-bedroom flat costing nearly £900-a-month received 500 applicants from students in less than 24 hours.
The flat in Glasgow, Scotland went online for £895 a month on Monday at 1pm - but was withdrawn by 9pm on Tuesday.
The lettings agency Pacitti Jones blasted universities as "unethical".
The company has a "no gazumping" policy, which means parents are not able to give financial leverage to support their kids.
All applicants are shown to the landlord to make a decision- even though one mum offered six months rent at the rate of £1,100.
Chief executive John O’Malley, said the situation was a "crisis" and is one of the worst that it has been this year.
Staff were regularly taking phone calls from crying students who were fearful of being homeless.
One Kuwaiti student spent three weeks in an Airbnb, facing the prospect of paying £350 a night.
John said: "We have got one Kuwaiti student going between AirBnbs for three weeks, his dad flew over to help look for accommodation.
"They are talking about paying £350 a night for an Airbnb."
John says oversea students are treated like "cash cows" by Scottish universities.
He says the Scottish Government policy treats all landlords like rogue landlords.
As a result, people are withdrawing from the market, meaning there are 40 per cent less houses available for tenants.
He believes that it's "mental" to expect students to pay nearly £895pcm, and "crooks capitalise by using old photos to advertise non-existent accommodation".
He said: "The universities are trying to take on more students, particularly overseas ones. For a lot of students, especially foreign ones, their experience of Glasgow has been negatively impacted.
"Students do daft things but they are quite vulnerable. The universities should be doing more for them to get accommodation.
"Our staff are struggling, it is difficult getting a call from someone begging and asking them.
"Scottish universities are more aggressively targeting international students. It is treating them as a cash cow.
"It is worse because these are young people not from this country, they haven't got a support network.
"It is really really difficult, we don't have the time to go back to everyone to say 'I'm sorry'."
He says that the situation is worse in Scotland than England as Scottish universities have a greater push to bring foreign students in, while keeping university free for Scottish students.
This is made even more difficult as many landlords and letting agencies do not want to accept guarantors who live abroad.
John has warned students against sites such as Gumtree and SpareRoom for finding accommodation, where younger people can be more easily scammed.
He said: “There are unregulated landlords on SpareRoom. There's dodgy landlords, there's criminals and fraudsters.
"The universities should be doing more to make it easier for them. It's an absolute disgrace, it's so unethical."
