Are you a student in the UK? Chances are, you have experienced the struggle of finding suitable accommodation near your university. With rising fees and increasing numbers of students enrolling in higher education, the demand for student housing has reached an all-time high. However, the supply of purpose-built student accommodation has not been able to keep up with this demand, leading to a shortage in many university cities. This has resulted in a hot topic of debate - is the UK's student property market in a bubble? In this blog post, we will break down the latest news surrounding the full-time student accommodation shortage, explore the challenges universities face in meeting this demand, and take a closer look at the future of student property in the UK. So grab a cup of tea and join us as we dive into this pressing issue facing students across the country.

With a record number of full-time students in the UK and a shortage of purpose-built student accommodation (PBSA), the current state of the UK's student property market is a cause for concern. Many students are turning to the Private Rented Sector (PRS) for accommodation, but the number of PRS properties available to rent is shrinking, and rents are rising as a result. According to Savills Research, there are 2.3 million full-time students in the UK, equivalent to three students per available bed in PBSA. This puts a tremendous strain on the PRS, as more students compete for a limited supply of rental properties.

Data from the Higher Education Statistics Agency (HESA) shows an 8% growth in the full-time student population in 2020/21. This is further supported by statistics from UCAS, which recorded almost 740,000 applicants and over 570,000 acceptances in 2021. However, the decline in PRS properties available to rent, as indicated by Rightmove data, exacerbates the problem. Additionally, the gap between tenant and landlord enquiries, according to the RICS survey, suggests that the demand for student accommodation is outpacing the available supply.

To make matters worse, Savills Research also reveals a 10% growth in rents across the mainstream rental market in 2022. This makes finding affordable and suitable accommodation even more challenging for students, who are already grappling with rising tuition fees and living costs.

In summary, the current state of the UK's student property market is characterised by a shortage of purpose-built student accommodation, an increasing number of students, a declining availability of PRS properties, and rising rents. These factors highlight the urgent need for solutions to address the accommodation crisis and ensure that students have access to safe and affordable housing options near their universities.

Are We Nearing a Bubble in the Student Accommodation Market?

Record-high university admissions and a shortage of purpose-built student accommodation (PBSA) have created a perfect storm in the UK's student property market. Landlords are capitalising on the high demand by hiking rents, leading to concerns that we may be nearing a bubble in the market. However, the influx of investment and development in the sector also raises the potential for oversupply.

Several factors could inhibit future demand for student accommodation. Rent controls, government rhetoric on immigration, and rising university costs may deter some students from pursuing higher education or seeking accommodation in the private sector.

According to student accommodation website StuRents, there is currently a shortage of 283,000 student beds in the UK, and this figure is projected to rise to 621,000 by 2026. This alarming shortage highlights the growing gap between the number of students and the availability of suitable housing options.

One reason for the shortage is the lack of growth in the homes in the multiple occupation (HMO) landlord market, as councils often oppose turning homes into HMOs for students or young professionals. Additionally, interest rate hikes and legislative changes are pushing some private landlords out of the market, further exacerbating the supply issue.

While the market may be facing challenges, it remains to be seen whether we are truly heading towards a bubble. It is clear, however, that urgent action is needed to address the student accommodation shortage and ensure that all students have access to safe and affordable housing near their universities.

Challenges Universities Face to Meet Accommodation Demand

As the demand for student accommodation continues to soar in the UK, universities are faced with numerous challenges in meeting this pressing need. Changes in the student population, combined with a shortage of available housing, have made student accommodation a top priority for universities across the country.

According to UCAS, demand for higher education from UK undergraduate students is predicted to increase until at least 2030. This means that the number of students seeking accommodation will only continue to rise, while the supply of available housing is likely to decrease. This creates significant pressure on the student housing market in the UK.

Each university will face unique challenges in addressing the accommodation demand. To support senior leaders in navigating their response, Universities UK (UUK) has released a briefing note. It emphasises the importance of taking a holistic view of how all students live in the local area, not just those in university-owned or managed accommodation.

UUK also encourages universities to collaborate with other institutions in the area to consider the overall impact of students on the local housing stock. This collaborative approach can help ensure that the needs of all students are met and that the strain on the accommodation market is eased.

Additionally, universities need to anticipate future changes in demand for accommodation, such as an increase in postgraduate students. Bournemouth University has developed an analysis model to predict student demand for accommodation, which can assist in planning and adjusting accommodation offers.

Collaboration between different university departments, including recruitment, admissions, and wellbeing, is also vital in supporting students and ensuring their accommodation needs are met effectively. By working together, universities can find innovative solutions to the challenges they face in providing suitable and affordable housing for their students.

Projections for the Future of the UK’s Student Property Market

Global investors are increasingly targeting the UK's Purpose-Built Student Accommodation (PBSA) sector, driven by a shortage of supply and rising student numbers, which in turn has led to strong rental performance. Historically, periods of economic uncertainty have resulted in increased enrolment in Higher Education, and the UK continues to attract a large number of overseas students. There are over 600,000 full-time international students in the UK, a significant increase from just over 400,000 five years ago.

Regarding future development, the largest concentrations of pipelines in the UK are in London, Nottingham, Leeds, and Birmingham, accounting for almost 40% of the total pipeline. However, planning authorities in cities like Glasgow and Manchester are becoming stricter about supporting new developments due to concerns about the over-concentration of students in certain sub-markets. The council in Glasgow has deemed certain sub-markets as having reached capacity and will no longer support further development.

Looking ahead, the international student population is projected to reach 1 million by 2028, and the overall student population is set to reach 3.1 million by 2030. These figures underscore the pressing need for continued investment in purpose-built student accommodation to meet the growing demand and ensure students have access to safe and affordable housing options near their universities.