Higher education applications to hit one million in 2030: where will they all live?
Making sense of the latest trends in property and economics from around the globe.
5 minutes to read
The student housing crunch
Applicants to UK universities face a worsening shortfall of quality accommodation.
There are currently 2.2 million full-time students in the UK, equivalent to around three students per available bed in purpose-built student accommodation (PBSA). Annual applications could hit one million by 2030, up from less than three quarters of a million today, according to UCAS projections. That would mean an additional 400,000 full-time students seeking some form of student accommodation.
We take a deep dive into the issue today as part of a series of essays in conjunction with UCAS and Unite Students.
The Private Rented Sector (PRS) is unlikely to pick up enough of the slack. Fewer landlords are entering the market, and more are choosing to move away from the student market or sell in the face of increasing tax, regulatory pressures, and new energy efficiency requirements. The PBSA sector is growing, but not fast enough. In Bristol and Manchester, for example, three additional full-time students have been added to the population for every new bed added to supply over each of the last five years.
The end of the decade may seem a long way off - most students who will be applying for the 2030 cycle haven’t started secondary school yet - but taking a scheme through planning to completion takes anything from three to five years. That puts an even greater urgency on the need to adequately plan for this expected growth now, our team argues. You can read their take here.
Swinging spring
Property market data spanning everything from prices to mortgage lending suggests that conditions are improving steadily as we move through Spring.
More comes this morning from Rightmove: the average price of property coming to the market rose 1.8% (+£6,647) this month, the biggest increase of the year so far, and significantly higher than the historic average May rise of 1%. Agreed sales numbers are running 3% behind the pre-pandemic market of 2019. The discount from final asking price to agreed sale price has steadied at an average of 3.1%, in line with normal market levels, reflecting home-mover confidence in the outlook for the market, the group said.
This is all encouraging, but will likely find a natural plateau as more borrowers face the level at which mortgage rates have settled. Roughly half of mortgage holders are yet to refinance since the Bank of England started raising interest rates, and about 1.6 million households will see their fixed rate deal expire this calendar year, according to a recent study by the Resolution Foundation. Here is Knight Frank head of UK residential research Tom Bill on the Rightmove figures:
“The shock of the mini-Budget meant the property market effectively shut early for Christmas and then got going later than normal in spring. Transactions are recovering after hitting their low-point in January and it’s shaping up to be a solid but not spectacular year as the impact of a recovering economy, strong jobs market and record levels of housing equity are kept in check by mortgage rates that are notably higher than 18 months ago. As the political temperature rises ahead of a likely 2024 general election, it should also be the steadiest year for the property market since 2018.”
A brighter outlook
The themes we're seeing in the property market are a reflection of the mood in the broader economy. Consumer confidence rose for the fourth month in a row in May to its highest level in more than a year, according to GfK's confidence index.
Consumers are taking a more positive view of their own finances and the health of the national economy, though both are rising fairly slowly from the record lows following the mini-budget.
Still, the fact that consumer confidence is rising while inflation is in double digits and interest rates are at their highest level since 2008 is a positive sign, particularly as inflation should start easing as the worst spikes in energy prices fall out of the annual comparisons.
The next CPI release, due out Wednesday, should show the annual rate of inflation dropping to 8.4%, according to Bank of England forecasts.
Renters' reform
The newspapers in the past fortnight have been packed with competing pledges from the two main political parties on housebuilding - see Wednesday's note. Everything we're seeing suggests that housing could be the central issue in a general election likely to take place next year.
The Times this morning runs polling from YouGov showing that 17% of voters trust Rishi Sunak and the Conservatives more to make the right decisions about building new housing. Almost twice as many, at 32%, trust Keir Starmer and Labour, although 37% say they trust neither main party.
Tom Bill this morning uses his note to step back and consider the degree to which either party can influence the number of homes built each year, and reads some of the fine print in the Renters' Reform Bill that was put before parliament last week. We've also got a Rural-specific take on the Bill from our experts Jess Waddington and Mark Topliff.
In other news...
Competitive prime average rents, pro-business policy and transport connections are encouraging occupiers into the thriving Madrid and Barcelona hubs, writes Laure Garcia.
In a new Rural Market Update, Andrew Shirley considers the takeaways from Rish Sunak's farming summit, held at 10 Downing St.
Elsewhere - Michael Gove rethinks refusal of ‘ugly’ homes (Times).