As the university term kicks off, we thought it would be interesting to consider how student housing rents have changed over the last 3 years.
Our last blog, entitled 'Student housing graduates to the mainstream league', looked at how the sector, has moved away from being classed as an alternative and is now looking increasingly mainstream. With this in mind, the chart below compares rental growth of student housing in the UK's major university towns with the main commercial property sectors, since 2012.
Aside from one exception, in every town analysed, rental growth in the student housing sector has been stronger than rental growth for offices, retail and industrial properties in the same town. For the savvy investor searching for yield, student housing was seemingly a good bet over the last 3 years.
We imagine a student would probably have a more sombre view of this analysis, as the financial cost and pressures of attending a UK university continue to spiral upwards.
Looking ahead we expect occupier demand i.e. students, for student housing to remain strong and continue to apply pressure on rents in this sector. Our earlier blog noted even as new student accommodation continues to be built, the student to bedspace ratio could worsen - UCAS reported earlier this year that student applications in the UK have reached record highs. This is something we will consider further in future blogs.
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