The balance between supply & demand within the UK student housing sector is more easily measured than in the wider housing market. Demand is contained within one town or city and determined by the number of students attending local institutions. However, this does not mean it is easier for developers and investors to get it right. It is essential to understand the profile of local student demand and the state of current and future supply to ensure the product being delivered is successful.

On the demand side, the traditional mix of first years and international students living in purpose-built accommodation are increasingly being joined by third year returners. Premium products have been successful in attracting wealthy international students but could be at risk of oversupply in some local markets.

Rising rents in the private rented sector may encourage some domestic students to live in purpose-built accommodation but could also drive others away from the most unaffordable towns and cities.

The supply required will be determined by scale of demand but also by the quality and quantity of existing competition. The introduction of the Energy Act 2011 requiring an EPC rating of E or better to let-out Homes of Multiple Occupation (HMO) or Halls from 2018 could reduce the level of existing supply in markets with lower quality stock.

There is a wide range in the scale of new purpose-built student housing supply expected in local markets. We have looked at the supply pipeline in four cities to give a flavour of the issues facing each market. With supply limited by a difficult planning environment, the Manchester market is ideally placed for more development, provided the developer has support from the universities. This is reflected in our Town and City League Table.

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^{Source: Savills Research}

The level of expected supply in Leeds, Glasgow and Liverpool also reflects their position in our League Table. Expected deliverable supply in Liverpool is the equivalent of 14% of full-time student numbers. With a larger proportion of students living in their own or parents’ home than other large university cities and a weaker housing market, the ability to absorb this amount of supply while maintaining rents and minimising voids will be tested and so choosing the right location will be crucial.

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^{Source: HESA}