Student housing crunch worsens across Europe, Australia, Canada

Supply of Purpose-Built Student Accommodation (PBSA) in Europe, Australia, and Canada is not meeting demand due mainly to a “slow construction pipeline,” according to research firm BONARD’s Student Housing Annual Report 2023. Demand for housing is particularly strong from international students, whose numbers have been rising in all the student cities BONARD analysed. The demand-supply imbalance caused rental fees to increase above inflation rates in many cities in 2023. Samuel Vetrak, BONARD’s CEO, writes in the report:

“[The supply-demand imbalance] enables operators to increase rents flexibly to cover costs without suffering any decline in occupancy rates.”

As a result, investors and operators in the sector generally enjoyed a profitable year in 2023, with PBSA outperforming other real estate classes.

BONARD is a market intelligence and advisory firm specialising in student housing and other rented residential asset classes in more than 200 markets around the world. The Student Housing Annual Report 2023 analysed 14,317 student residences across Europe, Australia, and Canada.

Report highlights

• The number of international students increased by 6.4% on average in 2023 across the cities BONARD surveyed.
• Rental prices in the UK rose the most (12.9%) relative to inflation of just over 7%.
• The average occupancy rate was above 95% across the sample.
• The supply-demand imbalance is getting worse:
  • provision rates (i.e., the number of beds to students needing them) declined over the past three years in close to one-quarter (22.5%) of the student cities surveyed.
  • BONARD projections see provision rates declining in 38% of cities by 2026 as the supply of new stock will not match the growth of the student population.

BONARD’s analysis shows that the student housing shortage is growing especially acute in the Canadian cities of Edmonton and Montreal; the Italian cities of Milan and Rome; and Madrid (Spain). Housing is also a growing issue in Warsaw, Lisbon, Barcelona, and Brussels.

Students are also increasingly making do with smaller rooms: the average room size in residences opened is under 20 square metres, and room sizes are becoming smaller especially in Italy. At the same time, rent per square metre increased in all countries except Canada.

BONARD states: “In 2023, BONARD researchers observed the highest rent increases since 2018. Rent levels increased more significantly than in 2022, both per region and tier city.”

As the following chart reflects, among the countries covered by the study, Canada’s rents increased the most (15% y-o-y) followed by the UK (12.9%).

For additional background, please see:

• “ICEF Podcast: How student accommodation crises are affecting international education"
• “Student housing investments jumped in 2022 but still lag behind demand”