The company has redefined “demand for PBSA” to deliver more accurate findings. Rather than looking at the total number of students per bed – as most data sets do – it has focused solely on what it has called “core demand” for PBSA i.e. students who are likely to opt for PBSA over HMOs.
This includes all 1st-year students living away from home, plus 2nd and 3rd-year international students and international postgraduates. StuRents then looked at how the levels of this core demand have changed over time against changes to PBSA supply in the 30 largest universities towns and cities outside of London.
It found that between the 2017-18 and 2020-21 academic years, PBSA supply in the UK exceeded core demand, which meant providers were partially reliant on 2nd and 3rd-year domestic students, who would be more likely to rent an HMO. That trend has since reversed and the gap between PBSA core demand and supply looks set to continue growing.
However are also numerous regional differences, with some cities such as Leeds and Sheffield still facing an oversupply of PBSA relative to this core demand.
Richard Ward, Head of Research at StuRents, said: “Historically, the PBSA sector used student-to-bed ratios or headroom analysis to understand if the location needs more accommodation or not. However, these metrics do not necessarily take into account the nuances of the market. And, for the most part, they ignore the critical role that HMOs play in accommodating students.
"Assuming that all domestic students want to and can afford to live in PBSA will cause investors and developers to draw misleading conclusions. Making investment decisions based on total student demand rather than “core PBSA demand” means you will be relying on 2nd and 3rd-year domestic students – who are more likely to be considering HMOs – to fill beds.”
Bristol and Glasgow are among the locations with the most scope for more PBSA. According to StuRents’ forecasts, the cities have scope for 6,490 and 7,285 more PBSA beds respectively.
However, in Leeds, where PBSA has long been oversupplied, the market has improved since 2016-17, thanks to a growth in core demand for PBSA. Overall, though, the market remains oversupplied by 1,068 beds.
Conversely in Sheffield, the market has deteriorated since 2016-17, with greater oversupply (6,348 beds) compared with core PBSA demand. This means PBSA is relying more heavily on 2nd and 3rd-year domestic students. In Sheffield, the average HMO enquiry for 2022-23 was just £97pppw and therefore some PBSA providers will have found it difficult to attract these domestic students given their higher price points.
Ward concludes: “Higher education in the UK continues to be very alluring, with both domestic and international numbers on the rise. Demand has increased significantly in Bristol and Glasgow, and supply growth is simply unable to keep up. This creates significant challenges for students looking for housing in both cities, as Glasgow University's decision to end its first-year housing guarantee demonstrates.”
