What does 2024 have in store for the student accommodation sector?

A new year is upon us, and, with it, comes new challenges and opportunities for the student accommodation market. In this blog, we're considering the impact of 2023 on the sector and forecasting upcoming trends you can expect to see over the coming months.

Supply growth will remain limited

The number of new PBSA beds being delivered slowed significantly last year, with ~12,000 beds delivered in 2023, down from 36,000 beds in 2019. This was reflective of the slowdown in planning, rise in construction costs, and increase in debt costs. Where PBSA is being delivered, it is being done so largely by the private sector and therefore higher education is increasingly dependent on private operators to accommodate students. 

Last year, the new PBSA that was delivered was generally much more expensive than the average UK student budget. As construction costs remain at historically high levels and the cost of debt high relative to recent years, it is harder for operators, developers, and investors to bring affordable beds to market.

In 2024, supply growth is likely to remain limited and concerns about the affordability of stock will remain as issues regarding construction costs and debt have not resolved. 

Planning applications will rebound 

Planning activity remained relatively low throughout 2023. In our Annual Report, we stated that applications totalling 27,000 beds were put forward in the first eight months of 2023, and fewer than 13,000 were granted planning permission. By contrast, in the same period in 2018, 37,000 applications were proposed and 33,000 were given the go-ahead.

As supply is currently unable to keep pace with demand, in 2024, we can expect to see a rebound in the number of planning applications put forward to try and counteract this imbalance. However, this won't necessarily lead to an equal jump in the number of approvals. 

Rental growth will remain strong

Rents have been continuing to rise across the student accommodation sector, following well-documented national accommodation shortages. In 2023, the average cost of PBSA per person per week, rose by 10.1% year-on-year. Rental growth in the HMO sector was even stronger, with rents rising by 13.1%. 

Rental growth is expected to remain strong in the 2024-2025 season. 60.9% of participants in our Annual Report webinar, StuRents Insights: A Year in Review, anticipated a rental growth of between 5 and 9.9%. You can watch the full webinar here for further insights.

This growth could have catastrophic implications for future demand within the sector, particularly among domestic students. We could see certain demographics being priced out of more expensive cities like London, or even see an increase in young people looking for alternative options to higher education, with rental prices becoming a barrier to entry.

Continued press interest in the affordability of UK higher education

The ongoing student housing crisis received significant coverage in the mainstream media and press in 2023. In fact, towards the end of the year, both StuRents' Head of Research, Richard Ward, and our co-founder and Director, Michael Rainsford, spoke on BBC Radio 4's You and Yours to discuss the impact of rising rents on students and how lack of affordability is affecting the market. You can listen to Richard's comments here and hear Michael's thoughts here.

As we move into 2024, we can expect to see continued press interest in the affordability of UK higher education and the impact this might have on current and future students. 

Download our Annual Report for more insights 

Many of the forecasts discussed above have been based on insights from our 2023 Annual Report. Download it today to dive for a more in-depth analysis of industry trends.