Student accommodation crisis: rents soar as supply dwindles

Student accommodation crisis: rents soar as supply dwindles

0:03 AM, 7th November 2023, About 8 months ago

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The UK’s student accommodation market is facing a crisis, as rents skyrocket, supply falls behind and demand increases, according to a new report.

StuRents, a student accommodation portal, says that student rents are now up more than 10% year-on-year, while student maintenance loans have only increased by 2.8%.

The average price for a bedroom in a shared student house is now £122 per week, while in purpose-built student accommodation (PBSA), it is £184 per week, which is 50% more expensive.

The report also reveals that the student lettings cycle for 2024-25 season has already started in some cities – the earliest StuRents has ever seen – reflecting the acute shortage of accommodation across the country.

‘Supply and demand fundamentals at a national level’

The firm’s head of research, Richard Ward, said: “Supply and demand fundamentals at a national level remain extremely bullish for operators.

“These dynamics are driving unprecedented rental growth. All the early indicators suggest further substantial hikes for 2024-25.”

The report also highlights the supply vs demand imbalance is likely to worsen in the coming years, with the delivery of beds not matching the growth in demand.

StuRents estimates a shortfall of 490,000 beds by 2026.

The report attributes the rising demand to several factors, including the demographic bulge of 18-year-olds, the increase in domestic applications due to the pandemic, and the recovery of international enrolments, especially from India and China.

Student search budgets grew on average by 7.3%

The report also notes that student search budgets grew on average by 7.3% in 2023-24 to £152 per week, indicating that students are willing to pay more for quality accommodation.

However, the report warns that the cost of accommodation and affordability will become a greater challenge for students in the coming years, as inflation is currently at 6.7% and student debt is expected to rise.

The firm also warns of the impact of the pandemic on student wellbeing and mental health, and the need for more support and flexibility from accommodation providers.

The report also analyses the planning activity in the UK, which remains at relatively low levels.

In the first eight months of 2023, applications totalling 27,000 beds have been put forward, but only 13,000 of them got approval.

In contrast, during the same period in 2018, 37,000 units were proposed, and 33,000 were approved.

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