Demand for university places has hit a record high but a slowdown in delivery of new student accommodation caused by the pandemic, as well as rising costs and inflation, is hampering construction viability, according to a new sector report from Cushman & Wakefield (C&W).

Issues of affordability for students will also mean a potentially growing differential between the maintenance loan and the cost of living potentially impacting where young people choose to study.

The new report shows there are now 2,175,835 full-time students studying at UK universities, setting a new record for higher education demand. There are also more students studying away from home than ever before, at 61% of the total population, an increase of 221,990 compared to five years ago. Overall, 1.63m students now have a requirement for a bed space during their course of study.

Despite this record interest, supply is struggling to keep pace. The academic year 2021/22 saw a continuation in the longer-term slowdown of new schemes being brought to the market, with the number of developments (69), less than half the level seen in 2017. Whilst the pandemic paused several planned deliveries, this trend has the potential to continue due to uncertainty around rising build costs, wider inflationary concerns, land availability and planning policy in
some locations.

Rents
From a rental perspective, student rates continue to rise, with the average annual private sector rent outside London now standing at £7,056 – 74% of the maximum Student Maintenance Loan amount. The average university-run price of accommodation stands at £6,483 – 68% of the maximum Student Maintenance Loan amount.

Overall, rental growth for 2021/22 stood at just 1.1%. However, this is set to bounce back in the next 12 months to 3.1%, according to the report.