_UK student housing continues to achieve positive rental growth

Headline rental growth for purpose built student accommodation (PBSA) increased by 2.55% for the 2017/18 academic year, according to Knight Frank’s Student Property Index.

The index is a comprehensive study of PBSA rents in the UK, analysing year-on-year growth across 75 cities on a room-by-room basis. We acknowledge that some operators employ dynamic pricing models and that rents may be subject to change.

Whilst the macro picture shows steady rental growth, individual markets are seeing varying levels of performance, largely dependent on supply and demand dynamics within cities.

Generally speaking, cities with large, growing student populations and modest delivery pipelines are outperforming the wider market in terms of rental growth. Cities with a large volume of existing PBSA stock, as well as healthy development pipelines, are reporting more modest growth.

A more detailed list can be seen in the report, which also features an update from Peter Cross, Investment Director at Liberty Living.

Stronger rental growth for en-suite and non en-suite rooms with shared kitchen facilities compared with self-contained studios in 2017/18 (figure 1), reflects higher levels of demand at the more affordable end of the market.

Indeed, as James Pullan, Head of Student Property at Knight Frank notes: "Affordability will be a key theme for the next few years. Construction cost rises make delivery of truly affordable accommodation a genuine challenge.”

We anticipate that rental growth in the sector will continue to be driven by growing student numbers – the latest data from HESA for 2015/16 shows the largest recorded numbers of both domestic and international students enrolled on courses at UK higher education institutions.

Download the full report.