The UK has been criticised for the cost of its student accommodation, particularly for its private off-campus housing which is often owned by overseas investors, and maintained by specialised student accommodation management companies. This structure has led the UK to become the most mature student accommodation market in the world. The expansion of this market structure into countries such as Australia and the USA, who are among the top competitors for international students has created a similar issue with affordability.
The high cost of accommodation is facilitated by the very market conditions that make the student housing sector so attractive to investors. Purpose-Built Student Accommodation (PBSA) is often located in the city centre and close to university campuses. In these areas, the limited development land that becomes available has a very high value and along with other development costs, make the provision of affordable student accommodation projects unfeasible. These barriers to entry make investment in student accommodation attractive as new competition is very limited.
UK student accommodation costs
According to Knight Frank, the average weekly cost of an en-suite room located within an off-campus accommodation building in the UK is £126. While a studio apartment will be £175. However, location is key. For a student seeking accommodation within the capital, these costs increase to £199 and £294, respectively. The importance of location is shown as similar en-suite accommodation in Derby and Sunderland will cost between £89 and £94 per week.
USA student accommodation costs
The location theme continues in the USA, which is home to some of the most expensive and cheapest student accommodation available. Boston and New York, the location of prestigious universities, are the most expensive student cities in the world. Study International, finds the average weekly accommodation cost in Boston is £364, while New York is £314. As with the UK, cities with less prestigious institutions offer accommodation at a fraction of the cost. Oxford in Ohio and Murfreesboro in Tennessee have an average cost of £96 per week.
Australian student accommodation costs
Australia has the highest student accommodation costs in the world, around 20% higher than the global average, Real Estate advisor, Urbis, finds the average weekly cost of an en-suite room in an off-campus building to be £162. In the key university city of Sydney this figure is £227. Melbourne has an average cost of £147 while Brisbane achieves a weekly rate of £136.
In summary
The price of off-campus student accommodation is highly affected by location and demographics. Accommodation near a prestigious university, in a city centre location, where there is a chronic deficit of student beds, will naturally attract a higher weekly rent rate as the market finds the equilibrium. However, the need for affordability has been identified, especially in the UK where rental growth and development rates for En-Suite and Non-En-suite is greater than that of studio apartments.
References
Urbis. 2018. Regional Student Accommodation Assessment. Accessed 9th April, 2019, from https://docs.education.gov.au/system/files/doc/other/regional_student_accommodation_analysis_report_final.pdf
Knight Frank. 2019. UK PBSA sector to continue domination in 2019, says expert. Accessed 30th May, 2019, from https://thepienews.com/news/uk-pbsa-sector-to-continue-domination-in-2019-says-expert/
Study International. 2018. Accessed 23rd October, 2019, from https://www.studyinternational.com/news/least-expensive-student-accommodation-world-report/
